This deferred compensation plan gets its name from Section 457 of the tax code. It is a type of non-qualified deferred compensation. The employee defers money into the 457 accounts on a pre-tax basis. Any growth in the account doesn’t get taxed until it is ultimately withdrawn years down the road, in retirement. Withdrawals are taxed then at ordinary income tax rates.
Where do you find a 457 deferred compensation plan? At government entities, and less commonly, non-church controlled tax-exempt organizations. Consequently, you won’t find a 457 plan at a for-profit corporation.
If your employer sponsors a 457 plan, how much can you put in? Same limits as with 401ks and 403bs: up to 100% of compensation, capped at $18,000 in 2017.
457 deferred compensation plan coordination & catch-up
If you have two jobs, one with your city, and another with a private company, you can contribute to both retirement plans. You have two separate and unrelated limits: You can defer $18,000...