A 457(b) is a deferred compensation plan for state and local government employees (and some tax-exempt organizations). Its most powerful feature: no 10% early withdrawal penalty once you separate from service, regardless of age.
A 457(b) is a deferred compensation plan for state and local government employees (and some tax-exempt organizations). Its most powerful feature: no 10% early withdrawal penalty once you separate from service, regardless of age.
For government employees planning early retirement, a 457 is arguably the best retirement account in the tax code. Funds are accessible the moment you retire — no waiting until 59½, no rule-of-55 requirement. And 457 limits stack with 401(k)/403(b) limits.
A government employee who also has a 403(b) can contribute the full limit to BOTH plans — that's $49,000 per year in 2026 before catch-ups, or $65,000 with standard age-50 catch-ups if eligible. This is one of the most generous retirement savings opportunities in the US.
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