Discover the basics and benefits of 457(b) and 401(k) plans along with the key differences between the two plans.

457(b) Plan vs. 401(k) Plan Comparison Chart

The following chart compares the contribution limits for 457(b) plans and 401(k) plans for 2026.

** Cannot be combined with Age 50 Catch-Up in the same year.

457(b) vs 401(k): Similarities and Benefits

457(b) plans and 401(k) plans are very similar. Both offer you the opportunity to make tax-deferred contributions to a retirement account. That means the money you contribute isn’t counted as taxable income for that year, therefore reducing your income tax liability. Instead, the funds can grow tax-free over the course of your career and are only taxed when you make a withdrawal. 457(b) plans and 401(k) plans even have the same annual deferral limits which may change from year to year. See the annual contribution limits for this year.

Another similarity is that 457(b) and 401(k) plans also could allow Roth contributions. Roth contributions are made on an after-tax basis, so you pay income taxes on the money before you contribute. Then, when you withdraw those funds, you pay no taxes on the money as long as you are over age 59 1/2; and you made your first Roth contribution to the account at least five years before your first withdrawal.

Both plans also allow someone over age 50 to make an additional contribution of $8,000 per year. Both plans allow participants aged 60, 61, 62 and 63 to contribute an additional $11,250 on top of the normal (not age-50) limit.* A 457(b) plan also allows you to make an additional Catch-Up contribution up to the annual maximum deferral allowed, for the three years before your normal retirement age. If you declare you plan to retire at age 70, for example, you can essentially make double contributions in the three years prior to the year you turn 70, subject to certain limitations. Note that you can’t make the Age 50 Catch-Up and the Pre-Retirement Catch-Up in the same year.

The Differences Between 401(k) and 457(b) Plans

While 457(b) plans and 401(k) plans share similarities, they are not available to all employees. Generally, 401(k) plans are offered to employees of for-profit companies, whereas 457(b) plans are provided to state and local public employers, as well as some employees of non-profit organizations. Employees of for-profit enterprises are not eligible to participate in 457(b) plans. However, public employees may be eligible to participate in one or both plans, depending on whether their employer offers.

The two plans are also different in that 457(b) plans offer a three-year Pre-Retirement Catch-Up provision, while 401(k) plans do not.

Another key difference is that a 401(k) distribution prior to age 59 1/2 may be subject to a 10% early withdrawal penalty and 457(b) plans generally do not have the same early withdrawal penalty.

However, if you change employers, you can roll over the funds from your 401(k) to your new employer's plan, assuming they offer a 401(k), without a penalty if you follow IRS rollover rules.

Offering a 401(k) and 457(b) Plan Together

For-profit companies typically offer 401(k) plans but are not eligible to offer 457(b) plans, which are limited to public-service organizations. In some cases, a public-service employer may offer a 401(k) to its employees, but only if the plan was established before 1986.

If you participate in both plans, you may contribute to both within the same calendar year, potentially increasing your annual maximum deferral in a single year.

401(k) vs 457(b) Plans: Which Is Better for Participants?

Despite their differences, 401(k) plans and 457(b) plans offer similar benefits to employees. Public-service employees who work for a public organization that offers both a 457(b) and 401(k) have access to both types of retirement plans.