A 457 plan is a tax-advantaged retirement savings plan for employees of state and local governments and certain other tax-exempt organizations. The 457 plan is similar to the 403(b) plan for public school employees, but there are some key differences. One of the key differences is that the 457 plan has a higher contribution limit.
For 2023, the 457 plan contribution limit is $22,500. The limit increases to $23,500 in 2024, and to $24,500 in 2025.
In addition to the annual contribution limit, 457 plans also allow for catch-up contributions. Catch-up contributions are additional contributions that can be made by employees who are age 50 or older. The catch-up contribution limit for 2023 is $7,500. The limit increases to $8,000 in 2024, and to $8,500 in 2025.
457 plans offer a number of benefits, including tax-deferred growth, the ability to make catch-up contributions, and the option to withdraw funds penalty-free after age 59. 457 plans can be a valuable retirement savings tool for employees of state and local governments and certain other tax-exempt organizations.
