A 457 plan is a non-qualified, tax-advantaged, deferred compensation retirement plan offered by state, local government and some non-profit employers. Plan participants include public workers, police officers, firefighters, and other civil servants. In addition, certain executives at hospitals, charities, and unions may also have access to 457 plans.
The 457 plan is very similar to the 401(k) plan, in that it’s a defined contribution plan, where an employer provides the plan and the employee defers compensation into it on a pre-tax or after-tax (Roth) basis.
Why Choose FuturePlan?
FuturePlan offers high-touch personalized service from local TPAs backed by the strength and security of a large national firm.
Breadth of experience
FuturePlan experts have been designing and implementing 457 plans for the past 30 years.
FuturePlan has some of the most credentialed and knowledgeable retirement plan practitioners in the world and is supported by a deep bench of more than 460 experts, 45 actuaries, and one of the industry’s largest in-house ERISA teams.
Guidance on Advanced Plan design
Plan design can be complex and requires an experienced professional to meet a company’s goal for establishing a retirement plan. FuturePlan will assess demographics, employee eligibility, vesting schedules, contribution types, nondiscrimination testing, and many other aspects.
Detailed service standards are maintained and monitored on a daily basis to evaluate turn-around times and ensure satisfaction.
The 457 retirement plan is generally only appropriate for employees of:
- State institutions
- Government institutions
- Some non-profit organizations
No Withdrawal Penalty
A key difference in a 457 plan versus a 401(k) or 403(b) plan is that, if an employee leaves a job or retires before age 59 ½ or withdraws money before the age of 55, no 10% penalty fee is assessed.
While plan sponsors may choose to automatically enroll their employees into a 457 plan, participation is still optional for employees. In addition, employees determine how much they wish to contribute to their plan and can change their rate at any time.
Attract and Retain Top Talent
Offering a 457 plan can make a benefits package much more appealing to current and future employees.
Pre-tax contributions made by employees helps lower their taxable income and earnings grow tax deferred.