Once a state or city government entity sets up the plan, workers can contribute a part of their pre-tax income, to save for retirement. There’s no tax due on the money until it’s withdrawn from the plan. This can be a terrific benefit, because when a person retires, they’re typically in a lower tax bracket than they were when they were used.
There’s an annual limitation to just how much a worker can add to the plan, and this limit increases once the employee is age 50. If their school offers both prepares, teachers are allowed to make optimal yearly contributions to both a 457(b) plan and a 403(b) retirement plan.
Unlike a 401(k), a governmental 457(b) plan does not have an early withdrawal penalty if a staff member retires or ends employment prior to age 59 1/2. There are also provisions that allow early withdrawals in the case of “extreme monetary difficulty” or an “unanticipated emergency”, like the severe disease of the worker or a member of the family, imminent foreclosure, or the need to pay funeral expenses.
As a general rule, the current a worker can wait to begin taking withdrawals is age 70 1/2. This, in addition to other regards to the plan, might differ from employer to employer, and each employer is required to have a plan document that spells out all of the terms for the plan.