457 Retirement Plan
457 retiremnt plan contributions are made by the employer, and employees defer their compensation into the plan until after tax (Roth). An employer-sponsored 457(b) plan enables you to save for retirement by taking pre-tax deductions from your pay check, thus lowering your taxable income. There is no 10% tax penalty for withdrawing retirement funds from a 457(b) before age 5912, unlike a 401(k) or 403(b). Both 401(k) and 457 plans are tax-advantaged retirement savings plans. Private employers offer 401(k) plans, while public and nonprofit employers offer 457 retirement plan. With a 457(b) plan, you can earn tax-deferred growth and choose how to invest your funds. You should also be aware of potential disadvantages, such as fees that may be higher than those for other types of investments and the lack of an employer match.
