457(b) Plan Contribution Limits: Understanding Your Options
November 21, 2023

One of the critical factors in maximizing the benefits of your 457(b) plan is understanding the contribution limits set by the IRS. These limits determine how much you can contribute to your plan each year, and they play a significant role in shaping your retirement savings. In this guide, we'll delve into the details of 457(b) plan contribution limits, ensuring you have a comprehensive understanding of your options.


457(b) Plan Contribution Limits Explained:


Your ability to contribute to a 457(b) plan is subject to IRS regulations. Here's what you need to know:


1. Annual Contribution Limits:

As of 2023, the IRS has set the annual contribution limit for 457(b) plans at $20,500. This means you can defer up to $20,500 of your salary before taxes into your 457(b) plan.


2. Catch-Up Contributions:

If you're aged 50 or older, you're eligible to make additional "catch-up" contributions to your 457(b) plan. The IRS allows an extra $6,500 in catch-up contributions, which means you can contribute a total of $27,000 per year.


3. Double Limit Catch-Up:

One unique feature of 457(b) plans is the ability to contribute twice the annual limit in the three years leading up to your plan's normal retirement age. This could allow for significant catch-up contributions as you approach retirement.


4. Employer Match Contributions:

Some employers provide matching contributions to 457(b) plans. These matching contributions do not count against your annual limit, making them a valuable addition to your retirement savings.


5. Non-Duplication Rule:

457(b) plans also have a non-duplication rule. This means that if you're eligible for both a 457(b) plan and another employer-sponsored retirement plan, you can't max out both using the catch-up provision. You'll need to decide where to allocate your catch-up contributions wisely.


6. Annual Review:

It's essential to monitor your contributions each year, especially if you're considering catch-up contributions. Regularly reviewing your retirement plan contributions ensures you stay within IRS limits while making the most of your savings potential.

Understanding the contribution limits of your 457(b) plan is crucial for optimizing your retirement savings. By staying informed about the annual limits, catch-up contributions, and the non-duplication rule, you can make well-informed decisions about how much to contribute to your 457(b) plan each year.


At Retirebetter, we're here to help you navigate the complexities of retirement planning, including maximizing your 457(b) plan contributions. Our team of experts can provide personalized guidance to ensure you make the most of your retirement savings potential. Contact us today to explore our services and take control of your financial future.