A retirement plan may be one of the most valuable benefits of employment. Used effectively, it can deliver a long-term impact on your financial well-being. See how a retirement plan works and learn about the power you have to control your financial future.
What is a deferred compensation plan?
A deferred compensation plan is another name for a 457(b) retirement plan, or “457 plan” for short.
Deferred compensation plans are designed for state and municipal workers, as well as employees of some tax-exempt organizations. The content on this page focuses only on governmental 457(b) retirement plans.
If you participate in a deferred compensation plan, you can contribute a portion of your salary to a retirement account. That money and any earnings you accumulate are not taxed until you withdraw them.
How a 457(b) plan differs from a 401(k) plan
One major difference is that currently 457 plans are designed for public sector employees, and 401(k) plans are designed for private sector employees.
Another significant difference between these plan types concerns the application of the additional 10% early withdrawal tax.
- There isn't an additional 10% early withdrawal tax, although withdrawals are subject to ordinary income taxes1
- There’s 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's no tax withholding if you leave for a new job and roll over your money into an IRA or your new employer's eligible retirement plan. (If you do not roll your distribution over and you do not take the distribution in annual installments of more than 10 years, it will be subject to 20% mandatory federal tax withholding.)
National deferred compensation plans
If you participate in a national 457 plan, find the plan here.
Tools & resources
Make the most of your 457.
Learn more about your 457 tax-exempt plan
 Keep in mind any amounts rolled into a governmental 457(b) plan from a qualified plan, 403(b) plan or traditional IRA may be subject to an additional 10% early withdrawal tax unless an exception applies.