This plan is one of a multitude of tax-friendly investing accounts and can only be opened by US citizens and US residents.
457 Plan options
There are a number of different 457 tax retirement plans available to individuals. The most common type is the b plan, which is available to employees of state and local governments, as well as certain non-profit organizations. Other types include the f plan, which is available to certain highly compensated employees, and the g plan, which is available to employees of the federal government.
The main advantage of a 457 retirement plan is that it allows participants to defer taxes on their contributions and earnings until they are withdrawn from the plan. This can provide a significant tax benefit, especially for participants who are in a high tax bracket.
Additionally, 457 plans often have more flexible withdrawal rules than other types of retirement plans, which can be beneficial for participants who need to access their funds before retirement.
One downside of 457 plans is that they are subject to the same early withdrawal penalties as other types of retirement plans. Additionally, the plans are not portable, which means that participants cannot take their account with them if they leave their job.
Difference of a 457 plan versus a 401(k) or 403(b) plan
457 plans have a number of key differences when compared to 401(k) and 403(b) plans. Perhaps the most significant difference is that 457 plans are not subject to the early withdrawal penalties that apply to 401(k) and 403(b) plans. This means that participants can access their funds without penalty if they leave their job before retirement.
Another key difference is that 457 plans are not portable, which means that participants cannot take their account with them if they leave their job. This is in contrast to 401(k) and 403(b) plans, which are portable and can be rolled over into a new employer’s plan.
Finally, 457 plans have more flexible withdrawal rules than 401(k) and 403(b) plans. For example, participants in a 457 plan can take withdrawals for any reason, without penalty, after they reach the age of 59 1/2. By contrast, 401(k) and 403(b) plans typically only allow withdrawals for certain reasons, such as retirement, disability, or death.
In order to understand the rules around these plans better, you can visit the government website.