A 457 plan is a retirement savings plan that is sponsored by an employer. It is similar to a 401(k) plan, but there are some key differences. One of the main differences is that a 457 plan allows employees to contribute more money each year than a 401(k) plan.
Another difference is that a 457 plan can be used in conjunction with a 403(b) plan. A 403(b) plan is a retirement savings plan that is sponsored by a non-profit organization. This means that employees who work for a non-profit organization can save for retirement in both a 457 plan and a 403(b) plan.
Another key difference is that the money in a 457 plan can be used to pay for qualified expenses before retirement. This includes things like buying a home, paying for college, or starting a business.
Employees who participate in a 457 plan can start withdrawing money from the plan when they reach the age of 55. However, if they leave their job before they reach the age of 55, they will usually have to pay a 10% early withdrawal penalty.
Overall, a 457 plan is a great way for employees to save for retirement. It offers some key advantages over other retirement savings plans, and it can be a great way to supplement a 403(b) plan.
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