457 B

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457 B

What is 457 B?

457b is a deferred compensation retirement plan. This is entitled to the workers of government and specific nonprofit institutions. Employees who are eligible for such a plan are allowed to deduct the amount as pretax for depositing into the retirement investment accounts. The earnings from these accounts until deposited are not taxable unless the amount is withdrawn from, in case of annuities and mutual funds.

In accordance with Internal Revenue Services (IRS), the limits for contributions in this plan for employers and employees are:

  • Employees includible compensation hundred percent
  • $ 19, 500 as of 2020; 2021 – Ref. IRC402(g)

50 years and older employees annual catch-up contributions = $ 6,500, along with additional money to contribute before three years of retiring, but not exceeding twice the limit of annual entitlement ($39,000) as of 2020; 2021. Annual basic limit $19,500 as of 2020; 2021 in case the amount not used previously – that means no catch-up contributions as a precedent.