Section 457 Retirement Plan Contribution Limits
Individuals can save up to $18,000 through a 457 deferred compensation plan.
The maximum amount a person can contribute to his or her section 457 deferred compensation plan is set each year by the Internal Revenue Service after taking inflation into account.
For the year 2017, people can contribute up to $18,000 as an elective deferral to their employer's 457 deferred compensation plan. Additionally, participants age 50 or older can contribute an extra $6,000 as a catch-up contribution.
Total contributions to the 457 plan cannot exceed 100% of the employee's compensation for the year.
|457 Plan Contribution Limits by Year|
|Year||Elective Salary Deferral Limit||Catch-up contributions if age 50 or older||Total Possible Employee Contribution Limit||Source|
The 457 plan contribution limit applies to all 457 plans you might have for the current year. If you work at two or more jobs or switch jobs in the middle of the year, then you may need to track your 457 plan contributions yourself to ensure that you don't contribute more than the limit.
For people who plan to contribute the maximum allowed, it may be easiest to break the annual limit into equal dollar amounts per pay period.
That way, you'll be saving the same amount each pay period and will be dollar-cost-averaging into your retirement investments.
457 Plans Permit Designated Roth Accounts
Since 2010, employers are permitted to offer inside their 457 deferred compensation plans. Previously, 457 plans held only tax-deferred accounts.
The Small Business Jobs Act of 2010 enables employers to revise their 457 plan to allow employees to place their salary deferrals into a designated post-tax Roth account and to permit employees to convert their pre-tax savings into a post-tax Roth.
Contributing to 457 and 401(k) or 403(b) Plans
Some employers offer both a section 457 plan and either a 401(k) plan or a 403(b) plan for their employees. In this situation, employees can contribute up to the annual maximum for both plans.
Reference Material from the IRS Web site: