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The 457 plan is a type of nonqualified, [1] [2] tax advantaged deferred-compensation retirement plan that is available for governmental and certain nongovernmental employers in the United States.
The 457 (b) retirement plan offers many advantages to government workers, including tax-deferred growth of their savings, but these plans do come with some drawbacks.
EGTRRA allows, for the first time, for participants in non-qualified 401 (a) money purchase, 403 (b) tax-sheltered annuity, and governmental 457 (b) deferred compensation plans (but not tax-exempt 457 plans) to "roll over" their money and consolidate accounts, whether to a different non-qualified plan, to a qualified plan such as a 401 (k), or ...
Section 409A makes a distinction between deferred compensation plans and deferral of compensation. The term "plan" includes any agreement, method, program, or other arrangement, including an agreement, method, program, or other arrangement that applies to one person or individual.
A 457(b) retirement plan is a tax-advantaged saving scheme available to government and certain non-profit employees. It allows participants to defer income taxes on retirement savings until the ...
The state also keeps its hands off state and local government deferred compensation plans, U.S. retirement bonds and the federally taxed portion of Social Security benefits.
Employee salary deferrals into a 403 (b) plan are made before income tax is paid and allowed to grow tax-deferred until the money is taxed as income when withdrawn from the plan.
Deferred compensation is a way for employees to reduce their tax burden while ensuring their economic security in their golden years. Deferred compensation plans with a long vesting period are ...