The 457 plan is a type of non-qualified tax advantaged deferred-compensation retirement plan that is available for governmental and certain non-governmental employers in the United States. The employer provides the plan and the employee defers compensation into it on a pre-tax basis. For the most part the plan operates similarly to a 401(k) or 403(b) plan most people are familiar with in the US. The key difference is that unlike with a 401(k) plan, there is no 10% penalty for withdrawal before the age of 59½ (although the withdrawal is subject to ordinary income taxation). Also 457 plans (both governmental and non-governmental) can allow independent contractors to participate in the plan where 401(k) and 403(b) plans cannot.
Read more about 457 Plan: Changes Within The Small Business Jobs Act of 2010, Changes With EGTRRA 2001, Governmental and Non-governmental Plans
Famous quotes containing the word plan:
“Solomon’s ... excess became an insult upon the privileges of mankind; for by the same plan of luxury, which made it necessary to have forty thousand stalls of horses,—he had unfortunately miscalculated his other wants, and so had seven hundred wives....
Wise—deluded man!”
—Laurence Sterne (1713–1768)