Deferred-compensation retirement plan used mainly by state and local government employers and some tax-exempt organizations.
A 457 plan is a tax-advantaged deferred-compensation retirement plan most closely associated with state and local government employees and, in some cases, certain nonprofit organizations.
It is part of the employer-plan layer of retirement finance, but it matters because its withdrawal and catch-up rules are often discussed separately from 401(k) and 403(b) plans.
A 457 plan matters because it is one of the main public-sector retirement saving vehicles outside traditional pensions.
contributions are typically made through payroll deferral
tax deferral supports long-term saving
plan rules often differ in important ways from 401(k) and 403(b) arrangements
the plan can sit alongside pensions or other employer retirement benefits
For many government workers, it is a core supplemental retirement account rather than a niche add-on.
Employees elect salary deferrals into the plan and choose among the investment options allowed by the sponsor.
Key practical features often discussed include:
annual contribution limits
catch-up rules near retirement
plan-specific rollover provisions
treatment of distributions after separation from service
Those details are why 457 plans are usually treated as their own comparison category instead of being folded into a generic workplace-plan label.
Both are employer-linked retirement plans, but 401(k) Plan Plan") is the standard private-sector reference point while 457 is tied more closely to public employers and certain nonprofits.
A 403(b) Plan Plan") is commonly used by public schools and qualifying tax-exempt organizations. A 457 plan is more naturally framed as deferred compensation under a different legal structure.
A 457 plan is generally an account-based savings vehicle. A Pension is a broader retirement-income promise that may exist alongside it.
Suppose a city employee contributes 10% of a $85,000 salary to a 457 plan.
That annual deferral would be:
The account balance then depends on contributions, investment returns, fees, and future withdrawal behavior.
401(k) Plan Plan"): Main private-sector comparison.
403(b) Plan Plan"): Another employer retirement plan for a different eligible workforce.
Deferred Compensation: Broader concept behind the plan structure.
Required Minimum Distribution (RMD)"): Later-life withdrawal rule that can affect retirement planning.