Planning for a secure financial future can be challenging, especially when there are many options and different ways to save for retirement. We recommend you create a long-term plan to ensure you’re financially secure throughout retirement. View our video series for guidance and a checklist to help you get started.
One option to save for retirement is a 457 plan. A 457 plan is a voluntary retirement savings plan that can help you defer a portion of your paycheck to accumulate additional money for retirement. It’s a tax-advantaged retirement plan for state, local government, and some non-profit organization employees. It’s a low-cost, convenient way to save for retirement through payroll deductions.
A few things to know about a 457 plan:
- You can contribute up to 100% of your salary if it doesn’t exceed the dollar limit set for the year. In 2022, the contribution limit is $20,500.
- If you are age 50 or older you may contribute up to an additional $6,500 for a total of $27,000.
- There are additional “catch-up” options with higher contribution limits when you’re within three years of your normal retirement age.
- Some 457 plans feature a Roth contribution option where you can contribute after-tax money from your pay rather than before tax.
- Not all employers match contributions to a 457 plan since it’s considered “extra” savings.
- You can tap into a 457 plan at any age, once you have separated from employment, without incurring an early withdrawal penalty.
The CalPERS 457 Plan
We offer a deferred compensation plan to public agencies and school employers and their employees. The CalPERS 457 Plan is a simple, low-cost way to save for retirement. To see a list of agencies that offer our plan, view CalPERS 457 Plan Participating Agencies. If you’re interested in enrolling, visit CalPERS 457.