457(b)
Business & Finance abbreviation · Personal Finance
| Stands for | Deferred compensation plan (Internal Revenue Code section 457(b)) |
|---|---|
| Categories | Business & Finance |
457(b) stands for Deferred compensation plan (Internal Revenue Code section 457(b)), a personal finance abbreviation.
Deferred compensation plan offered mainly by state and local governments and some tax-exempt organizations. Withdrawals from a governmental 457(b) after leaving the employer escape the 10% early-withdrawal additional tax at any age, which makes the plan valuable for police officers, firefighters and others who retire early.
Example: The county lets employees contribute to a 457(b) on top of the 403(b), effectively doubling how much they can shelter.
Usage notes
The 457(b) has its own contribution limit, separate from the shared 401(k) and 403(b) limit, so an employee offered both can defer the maximum to each. Non-governmental 457(b) "top-hat" plans for nonprofit executives are riskier because the assets remain the employer's property and are exposed to its creditors. A special catch-up provision applies in the three years before normal retirement age.
Related abbreviations
More personal finance abbreviations
- 401(a) – Qualified retirement plan (Internal Revenue Code section 401(a))
- 401(k) – Employer-sponsored retirement savings plan (Internal Revenue Code…
- 403(b) – Tax-sheltered annuity plan (Internal Revenue Code section 403(b))
- 529 – Qualified tuition program (Internal Revenue Code section 529)
- ABLE – Achieving a Better Life Experience account
- AER – Annual equivalent rate
- APR – Annual percentage rate
- APRC – Annual percentage rate of charge
- APY – Annual percentage yield
- AU – Authorized user
- BT – Balance transfer
- CIBIL – Credit Information Bureau (India) Limited