What is a 457(b) Plan?
A 457(b) plan is a tax-advantaged retirement savings plan available to certain employees of state and local governments and some nonprofit organizations. Like 401(k) and 403(b) plans, a 457(b) lets employees contribute part of their salary into a retirement account, typically through automatic payroll deductions.
However, the 457(b) has some unique features—especially when it comes to withdrawal rules and catch-up contributions.
How Does a 457(b) Plan Work?
Once enrolled, employees decide how much of their gross income to contribute. This amount is automatically deducted from each paycheck and deposited into their 457(b) account. Contributions are usually pre-tax, meaning they reduce your taxable income.
The money grows tax-deferred until it’s withdrawn, typically after retirement.
Some employers may also offer matching contributions, though it’s less common with 457(b) plans compared to 401(k)s.
457(b) Contribution Limits for 2025
For the 2025 tax year, the IRS contribution limits for 457(b) plans are expected to be:
Under age 50: $23,000
Age 50 and older: $30,500 (includes $7,500 catch-up)
What’s unique?
457(b) plans offer a “Double Catch-Up” provision for employees within 3 years of normal retirement age, allowing them to contribute up to double the annual limit (if they haven’t maxed out in prior years).
Note: You can contribute to both a 403(b) and a 457(b) plan simultaneously, effectively doubling your retirement savings potential.
457(b) vs. 401(k) and 403(b)
| Feature | 457(b) Plan | 401(k) / 403(b) Plans |
|---|---|---|
| Eligible Employees | Government & some nonprofit workers | Private sector (401k), nonprofits (403b) |
| Early Withdrawal Penalty | No 10% penalty before age 59½ | 10% penalty before age 59½ |
| Double Catch-Up Option | ✅ Yes (within 3 years of retirement) | ❌ Not available |
| Employer Match | Sometimes | More common |
Who Is Eligible for a 457(b) Plan?
You may qualify for a 457(b) plan if you work for:
State or local government agencies
Public schools, colleges, or universities
Certain nonprofit organizations (e.g. hospitals, foundations)
Some tribal governments
If you’re not sure if your employer offers a 457(b), check with HR or your benefits coordinator.
Benefits of a 457(b) Plan
Tax-Deferred Savings: Lower your taxable income now, grow savings tax-free.
No Early Withdrawal Penalty: Unlike 401(k)/403(b), there’s no 10% penalty for early withdrawals.
Extra Catch-Up Contributions: Maximize savings as you near retirement.
Payroll Integration: Simple and automatic savings through deductions.
Related Glossary Pages
Planning your payroll and retirement contributions? You may also find these helpful:
Learn how holidays may affect your retirement contributions in our Federal Holidays 2025 guide.
Need help identifying your business or employer for IRS filings? Read about the Employee Identification Number (EIN).
Curious about how your time off affects payroll? Check out Accrued Leave.
Track Your 457(b) Contributions with Confidence
If you’re saving for retirement with a 457(b) plan, it’s important to have clear and accurate paystubs showing your deductions and employer contributions.
Use our paystub generator free to create professional, IRS-compliant paystubs in minutes. Perfect for budgeting, proof of income, or staying on top of your retirement goals.
