457(b)

The 457 plan is a type of non-qualified tax advantaged deferred-compensation retirement plan that is available for governmental and certain non-governmental employers in the United States.

The employer provides the plan and the employee defers compensation into it on a pre-tax basis.

For the most part the plan operates similarly to a 401(k) or 403(b) plan most people are familiar with in the US.

The key difference is that unlike with a 401(k) plan, there is no 10% penalty for withdrawal before the age of 59½ (although the withdrawal is subject to ordinary income taxation).

457 plans (both governmental and non-governmental) can also allow independent contractors to participate in the plan where 401(k) and 403(b) plans cannot.

About the author

Nathan Tarrant

Nathan has worked in financial services, marketing, and strategic business growth for over 30 years. He was the founder and COO of a Queens award-winning financial services company based in the UK.

He operated as a financial & alternative investment advisor to delegates of the UN, World Health Organization, and senior managers of Fortune 500 companies in Geneva Switzerland, after the 2008 financial crash.

Today he is head of operations and marketing for Ascenture Capital Group based in Virginia.

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