457 Plan

The 457 Plan is a non-qualified, tax-advantaged, deferred-compensation retirement program. It is available for governmental and some tax-exempt non-governmental organizations. The employer sponsors the plan and the employee defers compensation into it on a pretax or after-tax (Roth) basis. This plan operates similarly to 401(k) and 403(b) plans. However, a key difference is that—unlike those plans—it has no 10% penalty for withdrawal before the age of 55. Still, the withdrawal remains subject to ordinary income taxation.