A 457 plan is a tax-deferred retirement savings account available to state and federal employees as well as employees of certain tax-exempt organizations.
The 457 plan is kind of like a 401(k) retirement savings plan in that it allows government employees to contribute up to a set amount, and that amount as well as any earnings on it grow tax free until paid out to the (former) employee in retirement. However, there is never a matching contribution from the employer (the state or federal government) as there often is for 401(k) plans.
Employees of eligible tax-exempt organizations should take extra care when deciding whether to enroll in a 457 plan, as rules about how the money is invested and whether creditors have access to it could affect whether their money is there when they retire.
Related Fool Articles
Recent Mentions on Fool.com
- Senior Discounts: Save Thousands of Dollars Starting at Age 50
- 3 Simple Steps to Retire Comfortably
- Retirement Planning: 3 Things People in Their 30s Need to Know
- The Average American Has This Much Saved in a 401(k) -- How Do You Compare?
- New Tax Laws for 2015: 10 Important Changes You Need to Know
- What Is an IRA? You Might Be Surprised