Key Features
- Offered to government
employees
- Tax deferred
A Section 457 plan is a form
of salary reduction plan,
similar to a 401(k) plan, which
is permitted to be offered to
employees of governmental
entities under Section 457 of
the Internal Revenue Code.
Employees are permitted to defer
an elective amount of
compensation which is deducted
from current taxable income.
Contributions to the plan are
retained by the employer, the
governmental entity, for the
purpose of providing retirement
benefits for the employee.
Section 457 plans are
generally appropriate for
entities who are unable or
unwilling to provide substantial
retirement benefits but who
desire to allow employees the
ability to make contributions in
amounts larger than those
available to individuals through
Individual Retirement Accounts.
They are good investments for
those employees who are
interested in investing for
their retirement because it is a
way of purchasing investments
with pretax contributions and of
accumulating their funds
tax-free. At retirement, a
participant's benefit is equal
to the then value of the
accumulated Investments held on
behalf of the participant. |
