457 Deferred Compensation Plans

What this video covers

• Who is actually eligible for a 457(b): state and local government employees and certain tax-exempt organization employees, and why private-sector workers are shut out
• The 2026 base deferral limit of $24,500, the age 50+ catch-up of $8,000, and the age 60-63 super catch-up of $11,250 (governmental plans only)
• The special three-year catch-up that lets participants defer up to double the annual limit ($49,000 in 2026), and why it cannot be stacked with the age 50+ catch-up
• Why a 457(b) early distribution avoids the 10% early withdrawal penalty entirely, even though ordinary income tax still applies
• The governmental versus tax-exempt 457(b) showdown: rollover eligibility, trust protection, catch-ups, and creditor protection
• Why a tax-exempt 457(b) is an unfunded plan whose assets sit with the employer's general creditors, similar to a non-qualified plan
• The legal double-dip: 457(b) deferral limits are separate from 401(k) and 403(b) limits, so a government employee with both can max each in the same year