All the key resources for leveraging the 457(b) advantage for...
Topics Covered
Contributions
How Much Can Be Contributed to a 457(b)
Participants may contribute up to $24,500 for year 2026 ($1,000 increase from 2025).
Age 50 Catch-Up
Participants may contribute up to $24,500 in 2026 ($1,000 increase from 2025). Those age 50 and over are able to contribute an additional $8,000 ($500 increase from 2025). The "super" catch up available to those ages 60-63 remains unchanged at $11,250. An employer can contribute up to $47,500. Starting in 2026 catch-up contributions must go into a Roth 403(b) account for employees making more than $150,000 in FICA wages.
Additional Catch-up (Three-Year Rule)
Employees who are three years from normal retirement age (as defined by the plan) are permitted the lesser of:
- Two times current year's normal retirement contribution limit, or
- Underutilized limits from past years. Note: not all employers make this additional catch-up option available nor are they required to do so. Check with your employer for details.
Investment Products
Investment Products Available in a 457(b)
Mutual funds and annuity products (which can include fixed annuities, equity-indexed annuties and variable annuities) may be offered. See your specific plan for details.
Roth 457(b)
This is a provision that permits employees to irrevocably designate all or a portion of their 457(b) as an after-tax Roth contribution. This type of contribution will not lower the employee's taxable income. However, distribution of qualified Roth designated funds in retirement will not be subject to taxation.
Participants have the option of making pre-tax 457(b) contributions, Roth 457(b) contributions, or as a combination of the two. Total contributions cannot exceed the year's contribution limit. Not all employers offer a Roth 457(b), nor are they required to do so. Check with your employer for details.
Distribution
Distribution Eligibility
- Age 59½ when still working (this is new as of 2021)
- Separation from service (as described above)
- Upon retirement
- Unforeseen emergency (see below)
- Divorce (see below)
- Death (see below)
Borrowing Money From Your 457(b)
Subject to availability and any additional conditions applied by individual vendors. IRS limits loans to the lesser of:
- $50,000
- One half of account value
Withdrawal Requirements for 457(b) Money
You must begin to take withdrawals from your 457(b) no later than April 1 of the year following the year in which you turn age 73. If you are still working, you can delay withdrawal from your 457(b) until April 1 following the year in which you retire.
See this IRS story on Required Minimum Distributions (RMD).
Transfers
What Happens to Your 457(b) If You Leave Your Employer
- Assets may be transferred to your new employer's plan if permitted by that plan.
- Assets may be moved to a rollover IRA at an institution of your choice. This will permit the money to continue to grow tax-deferred.
- You may leave the money in your current plan and continue to enjoy tax-deferred growth. If your account has less than $5,000, you may be required to transfer assets. Check with your employer for details.
- You may take a lump sum distribution. Unlike the 403(b), there is no 10 percent early withdrawal penalty for withdrawing 457(b) money upon separation of service. Withdrawals will be taxed as ordinary income.
Rolling a 457(b) Over to Other Plans
The IRS has this handy rollover chart which shows which plans the 457(b) can be rolled into and under what circumstances.
Other Life Events
Unforeseen Emergency Withdrawal
Unforeseen emergency withdrawals are permitted from your 457(b) account if the employee is under severe financial distress. The IRS definition of what qualifies as an unforeseen emergency is very specific and more stringent than the definition of hardship under the 403(b) plan. The emergency must be unexpected and unanticipated. Furthermore, the employee must have no other resources available to alleviate the stress, such as selling assets or obtaining a loan from a financial institution. Check with your vendor and employer for more information.
Unlike the 403(b), disability itself is not a distributable event. However, it may be considered an unforeseeable event and you may be able to withdraw money, subject to certain rules and restrictions.
Check with your employer and vendor for details.
What Happens to Your 457(b) in the Event of a Divorce
Some or all of the balance in your 457(b) account may be transferred. Distribution to an alternate payee will be permitted if it is made pursuant to a qualified domestic relations order (QDRO). This is a decree, judgment, or order that meets the qualification requirements of the Internal Revenue Code. Those requirements include the following:
- It must have been issued under a state's community property or other domestic relations law.
- It must relate to the provision of alimony, child support, or the property rights of a spouse, former spouse, child, or other dependent (alternate payee).
- It must assign to the alternate payee the right to receive all or a portion of the participant's plan benefits.
- It must clearly specify (1) the names and addresses of each alternate payee, (2) the amount or percentage of the participant's benefit to be paid to each alternate payee, (3) the period of time over which the order applies, and (4) each plan to which the order applies.
When discussing property distribution in contemplation of a divorce, you should make certain that your attorney ensures that the distribution of your 457(b) assets and all other retirement plan assets meet the requirements of a QDRO.
What Happens to Your 457(b) in the Event of Death
Death benefits are paid to a beneficiary or beneficiaries on file with your vendor. How the proceeds are distributed depends upon the age of the participant upon death and beneficiary's relationship to you. You should review your beneficiary designations annually and update them as necessary through your 457(b) vendor.