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What is a 457 Plan?

A 457 is a deferred compensation arrangement that is available to some government employers and non-profit organizations.

A 457 Plan, offered to state and local public workers and employees of a few nonprofit organizations, functions similarly to a 401(k) or 403(b): the contributions are automatically deducted from your paycheck before taxes and transferred into your account, where they grow tax-deferred until retirement.

The contribution limit is the elective deferral limit ($18,000 in 2016), plus catch up contributions if you’re over 50. They are technically considered unfunded, non-qualified deferred compensation arrangements.

Keywords: taxation, retirement accounts, elective deferrals,