457 Plan
Deferred compensation for state and local government employees.
What is 457 Plan?
A governmental 457(b) plan has its own deferral limit, separate from a 403(b), so an eligible employee with both can defer the full amount into each. Distributions after separation from service are not subject to the 10% early withdrawal penalty, regardless of age.
457 Plan: a worked example
A 50-year-old city employee who retires can draw from a 457(b) with no 10% penalty.
More terms in Retirement Plans, Accounts & Trading
IRA Rollovers vs. Transfers
60-day rollovers are limited to one a year; direct transfers are unlimited.
10% Early Withdrawal Penalty & Exceptions
Distributions before 59 1/2 cost 10% extra, unless an exception applies.
Solo 401(k)
A 401(k) for a self-employed owner with no employees other than a spouse.
Defined Benefit Plan
A pension promising a specific benefit; the employer bears the investment risk.
Defined Contribution Plan
An individual account plan whose payout depends on contributions and returns.
403(b) Plan
A salary-deferral plan for public schools and 501(c)(3) nonprofits.
SIMPLE IRA
A low-cost plan for employers with 100 or fewer employees.
SEP IRA
An employer-funded IRA plan, up to 25% of compensation.
All Retirement Plans, Accounts & Trading terms · Full glossary