457(b) Plan vs 401(k)
Compare 457(b) and 401(k) plans — same contribution limit, but very different withdrawal rules.
Overview
Government and some non-profit employees often have access to a 457(b) — and may be able to fund both a 457 and a 403(b)/401(k) in the same year, doubling their tax-deferred space. The 457 also waives the 10% early-withdrawal penalty if you separate from service before 59½.
Choose 457(b) Plan when...
Choose a 457(b) (in addition to other plans) if you work in government or for a qualifying non-profit and want to retire early, since you can withdraw penalty-free at any age after separation.
Choose 401(k) when...
Most private-sector workers will only have access to a 401(k). If you have both, fund both up to their separate limits.
Our Verdict
If you have access to a 457(b), it is one of the most underused retirement perks in the tax code — especially because it stacks with a 401(k) or 403(b). The lack of an early-withdrawal penalty makes it a powerful early-retirement bridge account. Use it before maxing other tax-advantaged space.
Frequently Asked Questions
What is the difference between 457(b) Plan and 401(k)?
Government and some non-profit employees often have access to a 457(b) — and may be able to fund both a 457 and a 403(b)/401(k) in the same year, doubling their tax-deferred space. The 457 also waives the 10% early-withdrawal penalty if you separate from service before 59½.
When should I choose 457(b) Plan over 401(k)?
Choose a 457(b) (in addition to other plans) if you work in government or for a qualifying non-profit and want to retire early, since you can withdraw penalty-free at any age after separation.
When should I choose 401(k) over 457(b) Plan?
Most private-sector workers will only have access to a 401(k). If you have both, fund both up to their separate limits.
Related Comparisons
Not sure which is right for you?
Ask Warren AI to analyze your specific situation and give you a personalized recommendation.
Get Personalized Advice Free