457 Deferred Compensation Plans

What this video covers

• Why 457(b) distributions carry ordinary income tax but zero 10% early withdrawal penalty at any age, unlike individual retirement accounts (IRAs), 401(k) plans, and 403(b) plans
• How the 2026 standard deferral limit of $24,500 compares to other employer plans, and why the two plan types run on separate tracks
• The governmental plan catch-ups available at age 50+ ($8,000) and ages 60-63 ($11,250), plus the special 3-year catch-up that doubles the limit to $49,000
• Why the special 3-year catch-up and the age 50+ catch-up cannot be combined; participants must choose the one that produces the higher deferral
• How governmental 457(b) plans differ from tax-exempt 457(b) plans on trust status, rollover eligibility, creditor protection, and catch-up availability
• Why a government employee with both a 457(b) and a 401(k) or 403(b) can max out both plans in the same year with entirely separate limits
• How to identify a plan type from question clues before applying the no-penalty rule, and why tax-exempt plan assets remain exposed to employer creditors