What Is a 457(b) Plan?
A 457(b) is a deferred-compensation retirement plan for many state and local government employees and some tax-exempt organizations. A key difference is that distributions generally do not face the 10% early-distribution tax.
How a 457(b) works
Participants defer part of their compensation into the plan, choose among the plan's investments, and generally pay income tax when taxable money is distributed. Governmental and nongovernmental plans can have different protections and rules.
The early-access difference
Unlike many 401(k) distributions, a 457(b) distribution generally is not subject to the 10% additional tax for early distributions. Ordinary income tax can still apply, and plan rules remain important.
Contribution limits
The 2026 elective deferral limit is $24,500, with catch-up rules that may apply. A special catch-up can also be available in the three years before normal retirement age under specific conditions.
Frequently asked questions
Does a 457(b) have the 10% early withdrawal penalty?
Generally no for eligible 457(b) plan distributions, although exceptions and plan type matter.
Can I roll over a 457(b)?
Rollover treatment depends on the plan and destination account. Verify the specific distribution and rollover rules first.
Sources
Gleefund explains general retirement-account concepts and provides estimates. It does not provide financial, tax, or legal advice. See our disclaimer and methodology. Check the current IRS rules before acting.
Figures current as of 2026-09-25. Found an error? Contact us.