457(b) Contribution Limits Explained

A 457(b) plan can give state and local government employees, along with certain employees of tax-exempt organizations, another way to build retirement savings beyond a pension or Social Security. These plans share some features with 401(k)s and 403(b)s, but their contribution limits, catch-up provisions, withdrawal rules, and rollover options have important differences.

For 2026, the basic 457(b) contribution limit is $24,500, up from $23,500 in 2025. Eligible governmental plan participants age 50 or older may be able to contribute more, and employees ages 60 through 63 have access to a higher catch-up limit when their plan permits it.

Understanding the annual contribution limit is only the beginning. Employer contributions can use part of the same limit, traditional and Roth deferrals share contribution space, and a special three-year catch-up can create additional savings opportunities for some employees approaching retirement.

What Is a 457(b) Plan?

A 457(b) is a deferred compensation plan available through state and local governments and certain tax-exempt employers. Employees generally contribute through payroll deductions, with the money invested for future retirement needs.

Traditional 457(b) contributions are generally made on a pre-tax basis for federal income-tax purposes. This can reduce current taxable income, while withdrawals from the traditional account are generally taxable when received.

Governmental 457(b) plans may also provide designated Roth contributions. Roth contributions are made with after-tax dollars, so they do not reduce current taxable income, but qualified distributions can generally be tax-free later.

Governmental and non-governmental 457(b) plans should not be treated as interchangeable. Governmental plans can offer features such as Roth contributions, age-based catch-ups, participant loans, and eligible rollovers, while non-governmental plans maintained by tax-exempt organizations generally have more restrictive rules and are usually limited to select management or highly compensated employees.

What Is the 457(b) Contribution Limit for 2026?

The basic annual contribution limit for a 457(b) plan is $24,500 in 2026. This represents a $1,000 increase from the $23,500 limit that applied in 2025.

Annual contributions generally cannot exceed the lesser of the applicable federal dollar limit or 100% of the participant’s includible compensation. Your employer’s plan can also impose procedures or restrictions that affect how contributions are made.

If you spread $24,500 evenly across 12 months, the average contribution would be about $2,042 per month. Someone paid every two weeks would need a different payroll election, so it is useful to review your contribution percentage whenever the IRS raises the annual limit.

2026 457(b) Contribution Limits at a Glance

The $49,000 special catch-up amount is a maximum ceiling rather than an amount automatically available to every participant. Your prior contribution history affects how much of that special limit you may actually use.

How Does the Age-50 Catch-Up Work?

Governmental 457(b) plans may allow participants who are age 50 or older by the end of the calendar year to contribute beyond the basic annual limit.

For 2026, the standard catch-up contribution is $8,000. An eligible participant could therefore potentially contribute $24,500 under the regular limit plus another $8,000, bringing total contributions to $32,500.

The plan must offer the catch-up feature, and the employee needs enough compensation to make the additional contribution. This standard age-based catch-up is a governmental 457(b) feature and does not apply in the same way to non-governmental tax-exempt 457(b) plans.

What Is the Enhanced Catch-Up for Ages 60 Through 63?

Employees who turn 60, 61, 62, or 63 during 2026 may qualify for a larger age-based catch-up contribution.

Instead of the normal $8,000 catch-up, eligible participants can contribute an additional $11,250, bringing their potential 2026 total to $35,750.

This larger amount replaces the standard age-50 catch-up rather than being added on top of it. Someone age 62, for example, would not contribute $24,500 plus $8,000 plus another $11,250. The $11,250 becomes the applicable age-based catch-up amount for that year.

For employees approaching retirement, this four-year window can provide a meaningful opportunity to accelerate savings if household cash flow allows.

How Does the Special Three-Year 457(b) Catch-Up Work?

The 457(b) also has a special catch-up provision that is separate from the age-based catch-up.

If your plan permits it, the special catch-up may be available during the three taxable years immediately before the year in which you reach the plan’s normal retirement age. It is designed partly to allow participants to make up for contribution room they did not use in earlier eligible years.

For 2026, the special catch-up can potentially allow contributions as high as $49,000, which is twice the $24,500 basic annual limit. The actual maximum is generally the lesser of twice the annual limit or the regular annual limit plus qualifying unused deferral room from prior years.

Someone who contributed substantially below the maximum in earlier years may therefore have more special catch-up room than someone who consistently maximized the plan.

The special three-year provision generally cannot simply be stacked with the age-based catch-up. If you could qualify for more than one catch-up provision, your plan administrator can determine which rule provides the larger permitted contribution based on your circumstances.

Do Employer Contributions Count Toward the 457(b) Limit?

Yes. Employer contributions generally count toward the same basic annual 457(b) limit as employee salary deferrals.

Suppose the employer contributes $5,000 to your 457(b) in 2026. Against the $24,500 basic annual limit, that could leave $19,500 available for your basic employee deferrals before considering an applicable catch-up provision.

This is different from the way many employees think about 401(k) plans, where there is a separate overall annual-additions limit that can accommodate employer contributions above the employee elective-deferral limit.

If your employer contributes to your 457(b), check that amount before automatically setting payroll deductions to the full $24,500 basic limit.

Can You Max Out a 457(b) and a 401(k) in the Same Year?

A major advantage of a 457(b) is that its annual deferral limit is generally separate from the employee elective-deferral limit that applies to 401(k) and 403(b) plans.

If you have access to both a 457(b) and a 401(k), you could potentially contribute $24,500 to each plan in 2026, assuming you have enough compensation and both plans permit the contributions.

That would create $49,000 in basic employee deferrals before any eligible catch-up contributions.

The same principle can apply when an employee has access to both a 403(b) and a governmental 457(b). This can be especially valuable for public employees who are several years from retirement and want to increase tax-advantaged savings without relying solely on one account.

How Do Traditional and Roth 457(b) Contributions Affect the Limit?

If your governmental 457(b) provides both traditional and Roth options, you can generally divide your contributions between them in whatever proportion the plan permits.

The important point is that they share one annual contribution limit.

For example, if you make $16,500 in traditional contributions and $8,000 in Roth contributions during 2026, the combined $24,500 uses the full basic annual limit. You do not receive a separate $24,500 limit for the traditional account and another $24,500 for the Roth account.

Traditional contributions may reduce current federal taxable income, while Roth contributions create taxable income today in exchange for the potential for qualified tax-free distributions later. The appropriate mix depends on your current tax rate, expected pension and Social Security income, other retirement assets, and future tax planning.

What Does the 2026 Roth Catch-Up Rule Mean?

Beginning in 2026, some higher-paid employees making catch-up contributions are subject to a new Roth requirement.

If your prior-year wages from the employer sponsoring the plan exceeded $150,000, certain catch-up contributions generally must be made on a Roth basis when the applicable plan offers catch-up contributions and the necessary Roth feature.

For someone making catch-up contributions in 2026, the determination generally looks at 2025 wages from the sponsoring employer.

The rules can become more complicated for governmental 457(b) participants using special catch-up provisions, so higher-income employees approaching retirement should confirm how their employer is administering the 2026 Roth requirement rather than assuming every catch-up contribution will receive the same tax treatment.

Are 457(b) Withdrawals Really Penalty-Free Before Age 59½?

An eligible governmental 457(b) has an important withdrawal advantage compared with many other retirement accounts.

Distributions from original governmental 457(b) money generally are not subject to the federal 10% additional early-distribution tax, even if the participant is younger than age 59½. Traditional withdrawals can still be subject to ordinary federal income tax, so penalty-free does not mean tax-free.

An important exception applies when the account contains money rolled in from a 401(k), 403(b), IRA, or another qualified retirement plan. Distributions attributable to those rollover amounts may still be subject to the 10% additional tax before age 59½ unless another exception applies.

For someone planning to leave public employment early, these withdrawal rules can make a governmental 457(b) particularly useful as part of a retirement income and withdrawal plan.

What Are the 457(b) Rollover Rules?

Governmental 457(b) plans generally provide substantially more rollover flexibility than non-governmental plans.

After becoming eligible for a distribution, governmental 457(b) money may generally be rolled into an IRA, another governmental 457(b), a 401(k), or a 403(b) plan that accepts the rollover. Moving pre-tax money into a Roth IRA generally creates taxable income because the transaction is a Roth conversion rather than a tax-free traditional rollover.

A rollover can simplify account management or provide access to different investments, but the destination matters. If governmental 457(b) money is moved into an IRA, future withdrawals become subject to IRA distribution rules. That can reduce the early-withdrawal flexibility you previously had inside the 457(b).

Non-governmental 457(b) plans are different. Their distributions generally cannot be rolled into an IRA or another eligible retirement plan, which is one reason participants need to understand the type of 457(b) they have before making retirement decisions.

How Do Required Minimum Distributions Apply to a 457(b)?

Traditional 457(b) accounts are generally subject to required minimum distribution rules. Under current law, the applicable starting age depends on your birth year rather than one universal retirement age.

For many current retirees, RMDs begin at age 73, while people born in 1960 or later generally have an applicable RMD age of 75. Employer retirement plans may also allow some employees who remain working for the plan sponsor to delay RMDs until retirement, subject to the applicable rules.

Another important change affects Roth employer accounts. Designated Roth 457(b) accounts are no longer subject to lifetime RMDs for the original owner under current federal law.

This can make Roth assets useful for someone who wants greater control over taxable income later in retirement rather than being required to take distributions simply because they reached a particular age.

What Happens to a 457(b) After the Participant Dies?

Beneficiary rules depend on the type of 457(b), the beneficiary’s relationship to the participant, and applicable required distribution rules.

For a governmental 457(b), a surviving spouse generally has more options than other beneficiaries and may be able to roll an eligible distribution into their own IRA or another eligible retirement account.

Many non-spouse beneficiaries are subject to the SECURE Act’s 10-year distribution rule, but important exceptions exist. Certain eligible designated beneficiaries, including some disabled or chronically ill individuals, minor children of the participant, surviving spouses, and beneficiaries not more than ten years younger than the participant, can have different distribution options.

Because beneficiary rules can affect both taxes and estate planning, beneficiary designations should be reviewed after major life events such as marriage, divorce, death of a spouse, or changes in family circumstances.

Common 457(b) Contribution Mistakes to Avoid

Many 457(b) errors come from using outdated figures or assuming rules from a 401(k) automatically apply to a 457(b).

Watch for these common issues:

• Using Old Contribution Limits: The 2026 basic limit is $24,500, not the $23,000 amount shown in older versions of this article.
• Ignoring Employer Contributions: Employer contributions generally count toward the same basic 457(b) annual limit.
• Combining Catch-Ups Incorrectly: Age-based and special three-year catch-up provisions cannot simply be stacked together.
• Assuming All 457(b) Plans Are the Same: Governmental and non-governmental plans have important differences involving Roth contributions, rollovers, loans, and plan assets.
• Rolling Over Without Reviewing Withdrawal Rules: Moving a governmental 457(b) into an IRA can change your ability to access the money before age 59½ without the additional 10% tax.

Understanding these distinctions can help you use the account intentionally rather than making decisions based solely on the contribution maximum.

How Should a 457(b) Fit Into Your Retirement Strategy?

Maximizing a 457(b) can be valuable, but the largest possible contribution is not automatically the right target for everyone.

A public employee with a substantial pension may use the 457(b) mainly for tax diversification, early-retirement flexibility, or discretionary spending. Someone with a smaller pension may need the account to fund a much larger portion of everyday retirement expenses.

Your savings strategy should therefore consider your pension, Social Security, expected retirement age, healthcare costs, other investments, debt, and desired retirement lifestyle together.

If you are increasing contributions because you want to leave work at a specific age, reviewing when you can retire can help translate your account balances into a realistic retirement timeline. A retirement dress rehearsal can also help test how your expected income and spending may work once your paycheck stops.

FAQs

What is the 457(b) contribution limit for 2026?

The basic 457(b) contribution limit is $24,500 in 2026. Eligible governmental plan participants may contribute more through catch-up provisions.

How much can someone age 50 or older contribute to a 457(b) in 2026?

An eligible governmental 457(b) participant age 50 or older may qualify for an additional $8,000 catch-up contribution, bringing the potential total to $32,500.

What is the catch-up limit for ages 60 through 63?

Eligible participants who turn 60, 61, 62, or 63 during 2026 may qualify for an $11,250 catch-up contribution, potentially bringing total contributions to $35,750.

Can I contribute $49,000 to a 457(b) in 2026?

Potentially, but only through the special three-year catch-up and only when the participant has enough eligible unused contribution room. The full $49,000 is a maximum ceiling rather than an automatic contribution limit.

Can I contribute to both a 457(b) and a 401(k)?

Yes. The 457(b) generally has a separate annual deferral limit from the employee elective-deferral limit applying to a 401(k) or 403(b), so eligible employees may potentially maximize both accounts.

Are governmental 457(b) withdrawals subject to a 10% early-withdrawal penalty?

Original governmental 457(b) money generally is not subject to the federal 10% additional early-distribution tax. However, ordinary income tax may apply, and money rolled into the plan from certain other retirement accounts can receive different treatment.

Does a Roth 457(b) have RMDs?

Under current federal law, designated Roth accounts in employer plans, including Roth governmental 457(b) accounts, are no longer subject to lifetime RMDs for the original account owner.

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