457 Plan

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Definition of '457 Plan'

A 457 plan is a retirement savings plan sponsored by an employer. It is similar to a 401(k) plan, but it is available to government employees and employees of tax-exempt organizations.

457 plans offer a number of advantages over other retirement savings plans. For example, contributions are made on a pre-tax basis, which means that they are deducted from your salary before taxes are calculated. This can save you money on your taxes now, and it can also help you to save for retirement.

In addition, 457 plans offer a variety of investment options. You can choose from stocks, bonds, mutual funds, and other investments. This allows you to diversify your portfolio and manage your risk.

Finally, 457 plans are portable. This means that you can take your money with you if you leave your job. This can be a valuable benefit if you are planning to change jobs or retire early.

There are a few things to keep in mind when considering a 457 plan. First, you need to make sure that your employer offers a 457 plan. Second, you need to decide how much you want to contribute. Third, you need to choose the right investment options. Finally, you need to make sure that you understand the rules and regulations governing 457 plans.

If you are considering a 457 plan, it is important to speak with a financial advisor. A financial advisor can help you to assess your needs and goals, and can recommend the best plan for you.

Here are some additional details about 457 plans:

* The maximum contribution limit for 457 plans is $19,500 in 2023.
* Employees can make catch-up contributions of $6,500 in 2023 if they are age 50 or older.
* 457 plans are subject to the same required minimum distribution rules as 401(k) plans.
* 457 plans are generally more flexible than 401(k) plans. For example, employees can usually make withdrawals from 457 plans at any time, without penalty.

457 plans can be a valuable tool for saving for retirement. They offer a number of advantages over other retirement savings plans, and they can help you to reach your retirement goals.

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