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Qualified Plans -
457 Plan |
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457 Plan
A tax-exempt deferred compensation program made available to employees of state and federal governments and agencies. A 457 plan is similar to a 401k plan, except there are never employer matching contributions and the IRS does not consider it a qualified retirement plan. Participants can defer some of their annual income (up to an annual limit), while contributions and earnings are tax-deferred until withdrawn. Distributions start at retirement age, but participants can also take distributions if they change jobs or in certain emergencies. Participants can choose to take distributions as a lump sum, annual installments or as an annuity. Distributions are subject to ordinary income taxes and the amounts cannot be transferred to an IRA.
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Glossary for definitions
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