457 Retirement Plans
Tax deferred plans are similar to popular 401k plans
You’ve probably heard of 401k plans created primarily for employees of private companies.
The 457 retirement plans, also known as deferred compensation plans, are designed for state and municipal workers and employees of some tax-exempt organizations.
If you participate in these plans, you can contribute a portion of your salary to a retirement account. That money and any earnings that you accumulate are not taxed until you withdraw them.
457 plan differences
Although they’re alike in many ways, there are some differences between 401k and 457 plans, particularly when it comes to early withdrawal penalties and minimum required distributions.
For instance with a 457 retirement savings plans (also called deferred compensation plans):
- There isn't a minimum retirement age.
- There isn't a 10% federal penalty for early withdrawal of funds, although withdrawals are subject to ordinary income taxes.
- There is a withdrawal option for unforeseen emergencies that meet certain legal criteria, if all other financial resources are exhausted
- Distributions are available in a lump sum, annual installments or as an annuity
- There is no tax withholding if you leave for a new job and rollover your money into an IRA or your new employer's 401k, 403b or 457 plan or if you take regular installments for 10 years or more (all other distributions are subject to 20% withholding for federal taxes)
Keep in mind that federal income tax laws are complex and subject to change. Neither Nationwide nor our representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions.
Nationwide 457 plan participants
Learn more about your Nationwide 457 plan.
Not a deposit • Not FDIC or NCUSIF insured• Not guaranteed by the institution • Not insured by any federal government agency • May lose value