Also known as a 457(b) plan. A 457 plan is a type of nonqualified deferred-compensation plan that is available for state and local governmental employers as well as certain nongovernmental and nonprofit employers. (Think police officers, fire fighters, teachers, etc. but not private employers).

Employees can contribute either pre-tax or after-tax (ROTH) and some employers also offer a match. Annual employee contribution limits are the same as 401(k) and 403(b) plans with the exception of one special catch-up provision which allows twice the annual limit or the basic annual limit plus the amount of basic annual limit not used in the previous years, whichever is less. The plan document must permit this type of special catch-up provision, but if it does, the employee may be able to make higher catch-up contributions 3 years before retirement age. Another difference is participants can withdraw funds before the age of 59 ½ as long as they either leave employment or have a qualifying hardship. A participant can take money out of their 457 without penalty at any age although they still have to pay income taxes on their pre-tax contributions. An employer can also choose to have another type of plan like a 403(b) in place with a 457 plan. There are lots of questions that arise about this type of plan. PPC plan consultants work hand in hand with ERISA attorneys to help structure 457 plans to meet the needs of the employer and answer any questions that arise.