There are several types of 457 plans available to government and certain nongovernmental employers in the United States, including nonqualified deferred-compensation plans with tax advantages. 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 59, 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.
