A Tax-exempt deferred compensation Program made available to employees of state and federal Governments and agencies. A 457 plan is similar to a 401(k) plan, except there are never employer matching contributions and the IRS does not consider it a Qualified retirement plan. Participants can Defer some of their annual income (up to an annual limit), and contributions and earnings are Tax-deferred until Withdrawal. Distributions start at retirement age but participants can also take distributions if they change jobs or in certain emergencies. Participants can choose to take distributions as a Lump sum, annual installments or as an Annuity. Distributions are subject to Ordinary income taxes and the amounts cannot be transferred into an IRA.
