Compare 403(b) and 457(b) Plans

Both plans are employee voluntary saving plans.

As a plan participant, you will benefit in many ways:

Reduce your taxable income while saving pre-tax dollars.
Gain interest on your tax deferred investment.
Have contribution automatically deducted from your paycheck.
Contributions to your 403(b)/457(b) are not taxed until money is withdrawn.

Let’s compare both plans:

Features	457(b) Plan	403(b) Plan
Basic Plan Contribution Limits in 2025	• $23,500 basic maximum contribution limit • 457(b) limits not coordinated with 403(b) plan	• $23,500 basic maximum contribution limit • 403(b) limits not coordinated with 457(b) Plan
Early Withdrawal IRS Penalty Tax	None – (normal income tax only)	10% early withdrawal penalty tax may apply under age 59 ½ plus normal income tax
Eligibility Rules	Non-discrimination rules do not apply	Universal Availability Rule non-discrimination apply
Age Based Catch-Up Option	Age 50+: Total of $7,500 annual limit – not permitted if special catch-up option used. Age 60, 61, 62, or 63 on December 31 of the calendar year: Total of $11,250 annual limit – not permitted if special catch-up option used.	Age 50+:Total of $7,500 annual limit. Age 60, 61, 62, or 63 on December 31 of the calendar year: Total of $11,250 annual limit.
Special Catch-Up Option	As permitted in the Plan Document, three years prior to Normal Retirement Age stated in the Plan, allows contribution of the lesser of: – Twice the annual limit ($47,000 in 2025), or – The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions)	As permitted in the Plan Document, 15 years of service option increases limit by the lesser of: – $3,000, – $15,000, reduced by the amount of additional elective deferrals made in prior years because of this rule, or – $5,000 times the number of the employee’s years of service for the organization, minus the total elective deferrals made for earlier years.
Purchase Service Credit State Retirement System	Permitted	Permitted
Distribution Restrictions	• Severance from employment • Age 59 ½ while employed • Disability or Death • Unforeseeable Emergency.	• Age 59 ½ • Disability or Death • Financial Hardship.
Portability of Plan Funds After Qualifying Event	Funds can be rolled over to: • Governmental 457(b) Plan of Another Employer • Another 403(b) provider approved in the Plan • IRA (Traditional, SEP, SAR-SEP) • Pension, Profit Sharing, 401(k)	Funds can be rolled over to: • 403(b) TSA approved in the Plan • Governmental 457(b) Plan of Another Employer • IRA (Traditional, SEP, SAR-SEP) • Pension, Profit Sharing, 401(k)
Hardship / Unforeseeable Emergency Distributions	Contributions may be distributed to the extent required for an unforeseeable emergency defined by the IRS as a severe financial hardship to you resulting from events such as a sudden and unexpected illness; an accident you or a dependent experience; loss of your property because of casualty; or other similar extraordinary and unforeseen circumstances arising as a result of events beyond your control. Withdrawals are only permitted for limited financial circumstances that must be substantiated.	Contributions may be distributed to the extent required for a financial hardship defined by the IRS as expenses deemed to be immediate and heavy, including: (1) certain medical expenses; (2) purchase of a principal residence; (3) tuition and related educational fees and expenses; (4) prevent eviction from, or foreclosure on, a principal residence; (5) burial or funeral expenses; and (6) certain expenses for the repair of damage to the employee’s principal residence. Withdrawals are only permitted for limited financial circumstances that must be substantiated.
Loans	Applies to all accounts and all Plans (403(b) &457(b)) of the Employer; limited to the lesser of: • $50,000; or • One half of vested account balance	Applies to all accounts and all Plans (403(b) &457(b)) of the Employer; limited to the lesser of: • $50,000; or • One half of vested account balance
Required Minimum Distribution	RMD rules apply at age 72 or later, severance from service, and also after death	RMD rules apply at age 72 or later, severance from service, and also after death