Typical Employers
Employees of state and local governments, as well as certain tax-exempt organizations — including many schools and educational institutions.
For Educators and Public Employees
How 457(b) Plans WorkDeferred Compensation, Separate Limits
A 457(b) deferred compensation plan is a retirement savings option for many public employees and educators. Learn how these plans work beside a 403(b). Meet in Hauppauge or nationwide through Atlas VirtualWealth.
Who Is Eligible?
Confirm With Your Employer
Availability is plan-specific. Check with your district, municipality, or benefits office to confirm whether a 457(b) plan is offered to you.
How Do They Work?
You contribute pre-tax dollars directly from your paycheck, which lowers your taxable income for the year. Your contributions and any earnings grow tax-deferred until you withdraw the money in retirement. We put our clients’ interests above our own.
2026 Contribution Limits
Annual limit (lesser of 100% of includible compensation or)$24,500
Age 50+ catch-up (if plan allows)+ $8,000
Ages 60–63 enhanced catch-up (if plan allows)+ $11,250
Special 457 catch-up (3 years before normal retirement age)Up to $49,000
The special 457 catch-up is available to eligible participants who under-contributed in prior years and may allow up to twice the regular limit. Plan rules control which catch-ups you can use. Confirm current IRS and plan figures before you act.
Key Features of 457(b) Plans
Tax Advantage
Pre-tax contributions reduce your current taxable income. Many governmental 457(b) plans also offer a Roth option, where you pay taxes now and qualified withdrawals in retirement can be tax-free.
Investment Choices
Most plans offer a range of mutual funds and other investment options. The lineup and fees vary by vendor, so the specific plan matters as much as the plan type.
Withdrawals
Distributions are generally taxed as ordinary income. Unforeseeable emergency withdrawals and distributions after separation from service may be permitted.
No 10% Early-Withdrawal Penalty
Governmental 457(b) plans generally do not have a 10% early distribution penalty when you leave your employer, even if you are under age 59½. Ordinary income tax still applies.
Why the Separate Limit Matters
Because the 457(b) contribution limit is separate from the 403(b) limit, many educators and public employees who have access to both a 403(b) and a 457(b) can contribute the maximum to each plan in the same year.
Related Guidance for Educators
403(b) vs 457(b)
Side-by-side snapshot of limits, catch-ups, and withdrawal rules.
403(b) Tax-Sheltered Annuity Overview
How the companion plan works for school and nonprofit employees.
Complimentary 403(b) Checkup
A short review of fees, options, and next steps.
Teachers, K-12, and School Employee Benefits
How pension, 403(b), and 457(b) pieces fit together.
Frequently Asked Questions
Employees of state and local governments, as well as certain tax-exempt organizations — including many schools and educational institutions. Check with your employer to confirm whether a 457(b) plan is available to you.
In 2026, the annual contribution limit is the lesser of 100% of your includible compensation or $24,500. Additional catch-up opportunities may be available if your plan allows them, including an age 50+ catch-up of up to $8,000, an ages 60–63 catch-up of up to $11,250, and a special 457 catch-up in the three years before normal retirement age. Confirm current figures with official IRS and plan documents.
Governmental 457(b) plans generally do not apply the 10% early distribution penalty when you leave your employer, even if you are under age 59½. Ordinary income tax still applies to traditional balances.
Yes. Because the 457(b) contribution limit is separate from the 403(b) limit, many educators and public employees who have access to both a 403(b) and a 457(b) can contribute the maximum to each plan in the same year.
Want Clarity on Your 457(b) and 403(b)?
Book a complimentary checkup or a complimentary Atlas VirtualWealth session. No obligation. No sales pressure.
Atlas Benefits Advisor
Christopher J. Vargas, LUTCF®
President & Chief Benefits Strategist
410 Motor Parkway, 2nd Floor, Hauppauge, NY 11788
Call: (631) 389-2358 (voice only) · Text: (631) 904-0901
cvargas@atlasbenefitsadvisor.com
admin@atlasbenefitsadvisor.com
Hours: Monday–Friday 8:00 a.m.–5:00 p.m.; weekends by appointment
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The One Big Beautiful Bill Act
The One Big Beautiful Bill Act fundamentally reshapes the financial landscape for millions of Americans, yet it introduces distinct factors that can impact your long-term retirement strategy. Understanding these changes to tax and policy is an important part of comprehensive financial wellness.