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Workplace Plans
Secure Your Future With a 457(b) Retirement Plan
The 457(b) Deferred Compensation Plan offers a flexible, tax-deferred way to build long-term financial security. Whether you’re just starting out or nearing retirement, a 457(b) plan helps you save smarter, retire stronger, and control your financial future.
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What Is a 457(b) Plan?
A 457(b) is a tax-deferred retirement plan designed for state and local government employees and some nonprofit organizations. Funds are contributed from your income without being taxed. You’re only taxed when you withdraw funds, typically at retirement after the funds have had time to grow. Your employer may even offer matching contributions.
457(b) Retirement Plans: Getting Started
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Enrolling in a 457(b) Plan
You can enroll in a 457(b) plan online. Depending on your plan’s rules, you may also be able to change your contribution amounts online.
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How a 457(b) Plan Works
Pre-tax contributions to a 457(b) plan reduce your taxable income for the year. Contributions and associated earnings aren’t subject to tax until they’re withdrawn. You may also be able to make after-tax Roth contributions, which allow for potentially tax-free withdrawals. See 457(b) max contribution limits for the current calendar year.
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Investing in a 457(b) Plan
You can control your 457(b) investments by choosing options from your employer’s plan. Your options typically range from conservative stable value funds to aggressive stock funds. Build a diversified portfolio, select a simple yet diversified target-date or target-risk fund, or ask your financial provider for advice.
Contributions, Eligibility, and Distribution
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Contributions
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The 457(b) maximum contribution for 2026 is $24,500 for normal contributions. For 457(b) catch-up amounts, see 457(b) contribution limits for the current calendar year.
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Eligibility Requirements
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A 457(b) plan is available to those who work for a state and local government or a tax-exempt nonprofit organization. There are no income limits, and some 457(b) plans offer a Roth contribution option.
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Distribution Options
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You can start withdrawing money from your 457(b) when you leave employment, in a lump sum or through scheduled payments. While employed, you may be able to withdraw funds after a certain age or in an emergency.
What Are the Benefits of a 457(b) Retirement Plan?
The key benefit of a 457(b) plan is that the savings are tax-deferred. Your contributions are pre-tax, reducing your taxable income and growing tax-deferred until you make a withdrawal. Other benefits include catch-up options, no early withdrawal penalties, survivor benefits, and roll-in options.
Catch-Up Options
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If you’re over 50, you can contribute more than the limit for the year. If you didn’t reach your 457(b) max contribution, the plan allows you to increase contributions beyond the normal maximum amount by using the special Pre-Retirement Catch-Up Provision. Those aged 60 to 63 can contribute an additional amount on top of the normal contribution (not the age-50) limit.*
No Early Withdrawal Penalty
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You can make withdrawals from your 457(b) account when you leave an employer and can take payments as needed or request scheduled automatic payments. You maintain control over your investments and continue to benefit from tax deferral even after you leave.
While employed, you may also be able to make withdrawals after a certain age, subject to your employer, IRS, and plan rules. This may vary based on the plan or due to an unforeseen emergency. A loan option may also be available.
Survivor Benefits
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You can designate a beneficiary, or beneficiaries, to receive any remaining assets upon your death. Designating beneficiaries helps ensure your assets get paid per your wishes, avoids the potential costs and delays of probate, and allows non-spouse beneficiaries to receive additional tax benefits.
Loan and Emergency Withdrawals
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A 457(b) plan allows you to withdraw money from your plan before retirement age for unforeseen circumstances. Learn more about hardship loans and emergency withdrawals.
Rollover Options
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457(b) plan rollover options depend what type of account you’re rolling into. Learn more about rollover options for different 457(b) plans.
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Frequently Asked Questions
How much tax will I pay on a 457(b) withdrawal?
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Withdrawals are generally taxable, but, unlike other retirement accounts, the 10% penalty tax does not apply to distributions before age 59 1/2 (the penalty tax may apply to distributions of assets transferred to the 457(b) plan from other retirement accounts).
For detailed tax information, view a Special Tax Notice Regarding Plan Payments.
What is the 457(b) RMD rule?
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Required minimum distribution rules apply to 457(b) retirement accounts. An RMD is the minimum amount you must withdraw annually in retirement. RMDs begin when you reach 73** and no longer works for that employer.
It’s essential to make sure your withdrawals are in line with the RMD, because there are penalties if they aren’t. Your retirement plan administrator will usually inform you what your RMDs are.
Contact us with any questions about RMDs for one of your MissionSquare accounts.
How do I withdraw from a 457(b) plan?
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To request a withdrawal from a MissionSquare account, log in to your accountto see if your employer allows online withdrawals. You can also complete and submit the forms in the 457(b) Plan Benefit Withdrawal Packet. To obtain a copy, contact MissionSquare Plan Services.
Have More Questions?
Call (800) 669-7400 to speak with a representative weekdays 8:30 a.m. to 9:00 p.m. EST.
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Related Services
Financial Planning Services
Participants have access to a variety of services, which can include one-on-one consultations with a [small-caps]Certified Financial Planner[/small-caps]® professional, personalized financial goal plans, and webinars on topics such as Social Security, Medicare, and estate planning.
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Understanding Retirement Taxes
Most distributions from your MissionSquare retirement accounts are subject to federal and possibly state and local income taxes. Planning for these expenses is essential to managing your investments.
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Roll-In Services
Learn about rolling over funds from one retirement account to another. We make the process simple and can help you weigh your options to determine what works best for your long-term goals.
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Related Education & Resources
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