457 plan

Definition

A tax-exempt deferred compensation program made available to employees of state and federal governments and agencies. A 457 plan is similar to a 401(k) 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), and contributions and earnings are tax-deferred until withdrawal. 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 into an IRA.

Use 457 plan in a sentence

You should try and find a way to use a 457 plan if you think that will be better for all that areinvolved.

​ Was this Helpful? YES  NO 25 out of 25 people found this helpful.

We had a 457 plan and that made me happy because we had been wanting one for a long time now and we finally got one.

​ Was this Helpful? YES  NO 25 out of 25 people found this helpful.

The 457 plan was used by the retirement conscious employee who wanted to plan for his future by investing in himself.

​ Was this Helpful? YES  NO 25 out of 25 people found this helpful.

Show more usage examples...

Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
credit for qualified retirement savings contribution Cash or Deferred Arrangement