What are Section 457 Deferred Compensation Plans?
There are two types of Section 457(b) plans:
See Also
Timing your deferred compensation distributions | FidelityHow a 457 Plan Works After Retirement- Governmental 457(b) – offered by governmental entities to all employees. These plans are very similar to qualified defined contribution plans, like 401(k) and 403(b) plans.
- Nongovernmental 457(b) – offered by tax-exempt employers to a select group of management or highly compensated employees. These nonqualified deferred compensation plans are not made available to all employees and are generally used as an add-on for executives. Assets remain the property of the employer and are subject to claims of the employer’s creditors.
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457 Plan highlights
Governmental Section 457(b) Deferred Compensation Plan
- For employees of state and local governments.
- Assets held for exclusive benefit of employees.
- Plans offered by Mutual of America accept salary deferrals only.
- Contributions subject to annual limits.
Section 457(b) Deferred Compensation Plan
- For employees of tax-exempt organizations.
- Limited to management and highly compensated employees.
- Plan is unfunded.
- Assets are subject to claims of employer's creditors.
- Contributions subject to annual limits.
Section 457(f) Deferred Compensation Plan
- For employees of tax-exempt organizations and eligible municipal employees.
- Limited to management and highly compensated employees.
- Plan is unfunded.
- Assets are subject to claims of employer's creditors.
