2026 457(b) Plan: What It Is, Contribution Limits and the No-Penalty Rule
The official 2026 457(b) elective deferral limit and both catch-ups — age 50+ and the SECURE 2.0 ages 60-63 higher catch-up.
The 2026 457(b) contribution limit is $24,500 in employee elective deferrals. At 50 or older you can add an $8,000 catch-up ($32,500 in total), and in the years you turn 60 to 63 the catch-up is $11,250 instead ($35,750 in total).
Official Published by the IRS for tax year 2026 (IRS Notice 2025-67). These are the figures for income earned in 2026, reported on the 2026 return filed in early 2027. Planning for 2027? See the 2027 figures →
What is a 457(b) retirement plan?
A 457(b) is a deferred-compensation plan offered by state and local governments and by tax-exempt organizations; contributions and earnings are tax-deferred, and a governmental plan may offer Roth contributions (IRS: IRC 457(b) deferred compensation plans). The two kinds are very different:
| Governmental (state, city, school district) | Non-governmental (tax-exempt employer) | |
|---|---|---|
| Who can join | Employees generally | Only a select group of management or highly paid employees (a “top-hat” plan) |
| Whose money it is | Held in trust for participants | Stays the employer’s property, open to its general creditors if it fails |
| Age-50 catch-up | Yes ($8,000 in 2026; $11,250 at 60–63 if the plan allows) | No |
| Rollover to an IRA | Yes | No |
No 10% early-withdrawal tax. Distributions from a governmental 457(b) are not subject to the 10% additional tax at any age once you leave the employer, except amounts rolled in from another type of plan or an IRA (IRS: Exceptions to tax on early distributions). That makes it the most flexible account for retiring before 59½; see the 401(k) withdrawal rules for the other plans.
The double limit. The 457(b) limit is separate from the 401(k)/403(b) limit, so an employee with both a 403(b) and a 457(b) can defer $24,500 to each in 2026, $49,000 before catch-ups.
The special 3-year catch-up. In the three years before the plan’s normal retirement age, a plan may raise the ceiling to the lesser of twice the normal limit ($49,000 in 2026) or the normal limit plus deferral room unused in earlier years; it cannot be combined with the age-50 catch-up in the same year (26 U.S.C. §457(b)(3) and (g)).
2026 457(b) contribution limits
| Limit | 2026 |
|---|---|
| 457(b) employee elective deferral limitAll your elective deferrals to this plan type, pre-tax and Roth combined | $24,500 |
| Catch-up contribution, age 50+Aged 50 or over by December 31 | $8,000 |
| Higher catch-up, ages 60 to 63Replaces the age-50 catch-up in the years you turn 60, 61, 62 or 63 | $11,250 |
| Maximum deferral at 50-59 or 64+Deferral limit plus age-50 catch-up | $32,500 |
| Maximum deferral at 60-63Deferral limit plus the higher catch-up | $35,750 |
A governmental 457(b) limit is separate from, and not aggregated with, a 401(k) or 403(b) — someone with both a 403(b) and a 457(b) can defer up to each plan’s limit in the same year. A 457(b) also allows a special pre-retirement catch-up (up to double the normal limit in the three years before your plan’s normal retirement age, IRC §457(b)(3)) that does not stack with the age-50 or ages-60-63 catch-up in the same year; QuantCalc does not publish a dollar figure for it because the amount is plan-specific (it depends on prior years’ unused deferral room) — ask your plan administrator.
Your 2026 457(b) limit
Employee deferrals only. Your plan must offer catch-ups for you to use them.
What a 2026 457(b) contribution saves you in tax
Enter what you would defer pre-tax. The tax engine figures your 2026 federal and state return with and without it. Leave the amount blank for your maximum at your age.
2026 federal and state returns as filed (the Tax Table where the form uses it), from the same tax engine as the federal income tax calculator. Your own wages only, no other income, the standard deduction. The cap is the 2026 limits shown in the table above, with the age-50 catch-up and, in the years you turn 60 to 63, the higher catch-up.
No Social Security or Medicare tax is saved. An elective deferral “isn’t included in wages subject to income tax at the time contributed. However, it’s included in wages subject to social security and Medicare taxes” (IRS Publication 525) — unlike a health FSA or HSA through a cafeteria plan. If your 2025 Social Security wages from the employer were over $150,000, catch-up contributions must be Roth (IRS Notice 2025-67; 26 U.S.C. §414(v), subsection (v)(7)), so that part saves no tax now. The Saver’s Credit (IRS Form 8880) is included: elective deferrals to a 401(k), 403(b), governmental 457(b), SIMPLE or the TSP count, on up to $2,000 per person, assuming you are 18 or older, not a full-time student, not claimed as a dependent and took no retirement distributions in the testing period.
State treatment: Pennsylvania taxes employee contributions to any retirement plan as compensation (PA Personal Income Tax Guide: Gross Compensation); New Jersey excludes only 401(k) deferrals and taxes 403(b), 457, Thrift Savings Plan and SIMPLE IRA contributions (NJ Division of Taxation: NJ Income Tax – Wages). Those get no state saving here; every other state is treated as following the federal exclusion, and city or county income taxes are not included. Not modelled: employer contributions, the 457(b) special pre-retirement catch-up, and whether Roth would beat pre-tax for you, which depends on your tax rate in retirement.
Pre-tax now or Roth later? See the Roth Conversion Planner → Every dollar deferred here is taxed when it comes out; the planner works out the years and brackets that happens in.
A 457(b) you can tap before 59½, a pension and Social Security are one retirement: run them together in a tax-aware plan with 10,000 market paths — Personal PRO — Go PRO — $49 once →
A 457(b) stacks on top of a 401(k) or 403(b) rather than sharing its cap — most people never use the room that opens. QuantCalc runs your whole retirement — withdrawals, taxes, Medicare surcharges — year by year, on the 2026 figures above.
Run the free tax-aware simulation →Common questions
What is the 457(b) contribution limit for 2026?
The 2026 457(b) contribution limit is $24,500 in employee elective deferrals. At 50 or older you can add an $8,000 catch-up ($32,500 in total), and in the years you turn 60 to 63 the catch-up is $11,250 instead ($35,750 in total). Source: IRS Notice 2025-67.
What is the 2026 catch-up for ages 60 to 63 in a 457(b)?
$11,250, in place of the $8,000 age-50 catch-up, for anyone who turns 60, 61, 62 or 63 in 2026 (IRS Notice 2025-67). With the $24,500 deferral limit that allows $35,750 of employee contributions.
What are the 2027 457(b) limits?
The IRS has not yet published the 2027 457(b) limits; until its annual notice comes out (the 2026 figures came in IRS Notice 2025-67), the latest official limit is $24,500, plus $8,000 at age 50 or $11,250 at ages 60 to 63 (IRS retirement plan COLA table). See the 2027 457(b) contribution limits, with the status of each 2027 figure marked.
Sources
- IRS Notice 2025-67
- IRS: IRC 457(b) deferred compensation plans
- IRS: Non-governmental 457(b) deferred compensation plans
- 26 U.S.C. §457(b)(3) and (g)
- IRS: Exceptions to tax on early distributions
Every figure on this page is read at build time from QuantCalc’s tax constants, the same ones the planner runs on, and was checked against the text of the documents above. Every figure with its source: JSON. QuantCalc is calculation software, not tax advice.
Related
2026 403(b) contribution limits → 2026 TSP contribution limits → 2026 401(k) contribution limits → Retirement plans compared: 401(k), IRA, 457, TSP → 401(k) withdrawal rules and penalty exceptions →