The 457 plan most educators have never heard of.
Some public school employees have access to a 457(b) alongside their 403(b) — a separate account with its own contribution limit and one meaningful difference worth knowing.
How it's different from a 403(b)
A 457(b) looks similar to a 403(b) on the surface — payroll contributions, tax-deferred growth — but it has its own separate contribution limit, meaning an educator with access to both can potentially set aside more per year than with a 403(b) alone.
The other distinguishing feature: withdrawals from a governmental 457(b) generally aren't subject to the early-withdrawal penalty that applies to most other retirement accounts if you leave your employer, though ordinary income tax still applies. That rule matters most for educators who plan to retire earlier than typical retirement age.
Who tends to benefit from one
- Educators who are already maxing out their 403(b) and want to save more.
- Educators considering an earlier-than-usual retirement.
- Educators who want tax-deferred growth without duplicating their 403(b) investments.
Wondering if a 457 makes sense for you?
A complimentary review can help you weigh the options.