457(b) — Governmental & Non-governmental
A 457(b) is a deferred compensation plan commonly offered to state/local government employees, and sometimes to certain nonprofits. Rules can differ meaningfully between governmental and non-governmental plans.
The core idea (in plain English)
You defer part of your paycheck into a retirement plan. Taxes are typically deferred (Traditional), and some plans offer Roth options.
A notable feature (governmental plans)
Many governmental 457(b) plans allow withdrawals upon separation from service without the same early-withdrawal penalty structure as other retirement accounts (tax may still apply). Confirm your plan rules.
Common pitfalls
- Confusing governmental vs non-governmental plan protections and distribution rules.
- Not reading plan documents (distribution options vary).
If you have a 457(b), confirm the plan type and its separation/withdrawal rules — it can materially affect how useful it is for your timeline.
Educational only. Always confirm eligibility, limits, and plan rules with IRS guidance or plan documents.