A 457 b plan is a type of deferred compensation plan that allows you to save for retirement on a tax-advantaged basis. The IRS sets contribution limits and mandates specific eligibility requirements for such plans, which are similar in many ways to 401(k) and 403(b) plans offered by private employers.

What distribution rules for 457 b? A 457b retirement plan is designed to supplement the retirement savings you've already established through your 401k or 403b. While these two plans allow you to save for retirement at work, they have a number of limitations that can result in lost savings opportunities. That's where the 457b comes in — it allows you to save for retirement at work, but not as much as either of those two plans does.

A 457b plan is a supplemental retirement plan that may offer tax advantages and additional savings opportunities, but it won't replace your primary 401(k) or 403(b). The annual contribution limit for a 457 b is the same as for other employer-sponsored plans. If you have multiple plans with your employer (like a 403(b) and 401(k)), you can contribute to both of them on top of your 457b contributions.

What about tax for 457 b? Contributions to a 457b plan aren't taxed until they're withdrawn. This means that you can contribute more money to your 457b than you can to a 401(k) or 403(b). You'll be able to take out your money at any time, including before age 59½, but this will subject you to a 10% penalty on top of any income taxes due.

Pros: 

• Flexibility. Because of the way the 457(b) plan is set up, you can contribute more money than you would be allowed to in other types of retirement accounts like 401(k)s or Roth IRAs. If you're self-employed, this can help make sure that your business is adequately covered in case something happens to you or a family member.
• Lower taxes. As a general rule, contributions to these types of plans are tax deductible while distributions aren't taxable as long as they're used for qualified expenses like tuition payments or medical bills. This can lower your overall tax burden by reducing what gets taken out of each paycheck at first and then delaying any eventual payments until later on down the road when it's likely going to be less expensive for you financially if possible.

Cons:

• You may have to pay a 10% early withdrawal penalty if you withdraw money from your 457(b) plan before age 59½. The amount of the distribution that is subject to the 10% early withdrawal penalty will be reported on Form 1099-R, unless you roll over all or part of it within 60 days after receipt (60 day rollover) or wait longer than five years before receiving another distribution from your account.