Basics of a 457 Plan

A 457 plan is typically offered to employees of state or local governments. There are some unique features to these plans and they are different from a 403(b).

A 457 plan is a supplemental retirement plan offered through your employer. It is similar to a 403(b) plan. Your savings contributions come directly from your paycheck into your retirement account. A 457 plan has slightly different rules related to withdrawals and contributions.

Early withdrawals from a 457 plan

Unlike with 403(b) plans, you will not have a penalty for early withdrawals you make from a 457 plan before age 59 1/2. However, you can’t withdraw your money while you are employed, and hardship withdrawals may be more complicated than with a 403(b). You will owe income tax on all withdrawals, regardless of age.


The contribution limits with a 457 plan are the same as with a 403(b), but there is a key difference. If your employer also offers a 403(b), you can contribute to both plans and invest up to the maximum in each account.

For more information on retirement plan types and features, go to Comparing 401(k), 403(b), and 457 Plans.