Comparing the Different Types of 457 Plans

Depending on the type of organization and structure, different rules may apply.

There are several reasons employers may want to offer a 457 retirement plan. A 457 plan: 

• Provides governmental organizations with a retirement solution
• Provides a way to retain key employees
• Provides additional compensation and allows employers to attract key employees (457(f) plans have no employer contribution limits)
• Allows employers to offer a more complete retirement program to their employees. 

A 457 plan provides advantages to employees, as well. 

• Employees are able to contribute to a 457(b) plan on a pre-tax basis, and earnings are taxed only when employees take a distribution
• Governmental 457(b) plans may allow employees to contribute Roth elective deferrals
• 457(b) tax-exempt (top hat) plans offer the ability to postpone taxation of distributions, providing participants with flexibility
• Employers and employees are able to contribute up to the limit ($18,000 in 2017) for 457(b) plans, in addition to contributions in other retirement plan
• 457 plans, in combination with other retirement plans, allow employees in their peak earning years to defer the payment of federal and state income taxes on their contributions

Learn more about the different types of 457 plans and how they may benefit you and your employees.