457 Deferred Compensation Plans

About the 457 and Why It Is Important

The 457 is a retirement plan available to employees of state and local governmental agencies, including public school employees. It is sometimes referred to as deferred compensation. The 457(b) is named after the section of the IRS code governing it.

The 457 can be an excellent way to save money for retirement. It can serve as a supplement to a traditional pension plan or other retirement plan(s), or as a stand-alone plan.


State and local governmental employees are eligible to participate in public 457 plans. This means that all public school employees are eligible to participate. However, not all eligible employers make this plan available to all employees. Check with your employer for details.

How a 457 Works

Employees enroll and participate through their employer. Contributions to a 457 are made on a pre-tax basis through a Salary Deferral Agreement. This is an arrangement where the participating employee agrees to take a reduction in salary. The amount by which the salary is reduced is directed to investments offered through the employer and selected by the employee. These contributions are called elective deferrals and are excluded from the employee’s taxable income. Contributions grow tax-deferred until the time of retirement, when withdrawals are taxed as ordinary income.

For more information go to:

                      457(b) Deferred Compensation Plans
What is a 457 Plan?
WM Durham Associates LLC nor any of its employees provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. This material should be regarded as general information.​​