Definition of a 457 plan
A 457 plan is a non-qualified, deferred compensation plan established by state and local governments and tax-exempt employers. With a deferred compensation plan you postpone receiving a portion of you salary to be received at a later date. In many cases, employers that allow employees to participate in 403(b) plans also offer 457 plans to their employees.
457 plans offer the following features:
- a "standard" 457 catch-up provision,
- the unique ability to withdraw account savings before age 59 1/2, after separation from service, without a 10% early withdrawal penalty, and
- the flexibility to consolidate retirement accounts.
Contact your Plan Administrator to learn if your current employer deferred compensation 457 Plan has been amended to include the new changes.