Contributions to 457(b) are subject to FICA. Employer-sponsored retirement plans are an alphabet soup of Internal Revenue Code citations. 457 plans are for employees of state and local municipal governments. 403(b) and 457(b) plans are tax-deferred retirement savings programs provided by certain employers. For example, the 457(b) must be operated in accordance with the plan document, eligibility requirements must be clearly defined and followed, contribution limits must not be exceeded, and there must be an accurate procedure for submitting … 403(b) 457(b) 2020 Contribution Limits: $19,500: $19,500: Age 50 Catch-up: $6500: $6500: Catch-up … Thrift Savings Plans are for federal civilian and uniformed services employees, like U.S. postal workers. When you’re age 50 or over and your 457 plan has a 3-year catch up: $24,000 to the 403(b) plan and $36,000 to the 457 plan ($18,000 x 2) If you’ve worked for a qualified organization at least 15 years: you may be eligible to contribute up to an additional $3,000 to the 403(b) plan … Plans under section 457 offer valuable tax-deferral benefits, and the lack of a 10 percent penalty on early withdrawals before age 59 and a half makes it an attractive option compared with Section 403b plans. For example, a state or local governmental entity other than a public school or university may need to have a 457(b) plan, because it cannot normally have either of the other types of plans. 457 plans are non-qualified plans, whereas 401 (k) plans are qualified plans. Many large government employers offer both plans… 457 plans are available to employees of state/local governmental agencies and certain tax-exempt organizations. 403(b) plans are for employees of non-profit or tax-exempt organizations, such as public schools, colleges, philanthropic organizations, hospitals, libraries and churches. The attractiveness of a 457(b) plan as compared with a 403(b) plan or a 401(k) plan may vary greatly depending on the circumstances. If the 457 plan is the only retirement plan your company offers then the limits are the same as they would be with the 401k or 403b. Employers such as public educational institutions (public schools, colleges and universities), certain non-profits, and churches or church-related organizations may offer 403(b) plans. Here's what you need to know. If you have a combination of two plans—a 457(b) and a 403(b) or a 457(b) and a 401(k)—you can contribute the maximum amount to both plans. Because of these negatives, loans from these plans are rarely a good idea. Granted, the maximums are pretty high. Loans. Same as 403(b) – then will be subject to new plan rules (10% penalty on early withdrawals). A major benefit for those with access to both a 403(b) and 457 plan is the ability to contribute to both at the same time. How are 403(b) & 457 plans different? One of the primary differences between the two plans is the 457 plan’s lack of an early withdrawal penalty. Stated another way, you can contribute up to the maximum for each! The 457 has no penalty for distributions after leaving the employment of the plan's sponsor. That means you could contribute up to $39,000 combined. As a UC employee, you can contribute to the 403(b) and the 457(b) as long as you are not a student working fewer than 20 hours per week. All UEI employees are eligible to participate in the 403(b) and/or the 457 plan. However, if your employer offers BOTH a 401k/403b and a 457, you may contribute the maximum amount to both plans. I would be very surprised if you could max out one of those, much less both as a resident in addition to a personal +/- spousal Roth IRA, but if you could, then that would be fine. Whether you participate in a 401(k), 403(b) or 457(b) program, the information in this tool includes education to assist you in determining which option may be best for you based on your personal financial situation. Tony, 457 plans have a different distribution rule from 403b and 401k plans. 457 Plan vs 401(k) plans. For higher education, you typically only see 457 plans made available alongside 403(b) plans. This is different from the 403b and 401k plans where distributions prior to 59.5 will result in a 10% early withdrawal fee. Contact: Ari Williams UEI Human Resources email / (916) 278-4726. With a 457(b) things can be a little confusing because plans such as the 457(b) (and also 403(b) plans), typically get less attention. Excess IRC 402(g) contributions, including violating the 15-year rule limitations. As of 2011, participants in 457(b) plans can make annual contributions of the lesser of 100 percent of their gross salary, or $16,500, into the plans. This doesn’t matter much to you. The number of investment options under a 457(b) plan are fewer than the 403(b) plan. Top ten issues identified during IRS audits of IRC 403(b) and 457 plans. 457 plans are offered by state or local government and some tax-exempt employers, whereas 401 (k) plans are offered by private employers. Employer-sponsored plans like these are among the easiest ways to develop good savings habits. These workers may not be able to … Another major difference between the 457 and the 401k/403b is that you are not assessed the 10% penalty for early withdrawals. 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