Our 457 Calculators For Savings And Payouts

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Our specialized 457 calculators are designed to simplify the financial aspect of retirement. The 457 Savings Calculator helps you project the growth of your 457 retirement plan based on your contributions, employer matching, and expected annual returns. This tool is ideal for understanding how your retirement savings can grow and evolve over time. On the other hand, our 457 Payout Calculator provides insights into how you can strategically withdraw from your 457 during retirement using annuities.

457 Savings Calculator

Our 457 savings calculator is designed to provide you with clear projections of how your investments will mature based on your initial amount, contribution frequency, and interest rates.

Input your annual salary, the percentage you would like to contribute, any projected salary increases, your current age, the age you wish to retire, and the projected rate of return. You can also add any employee matching you have available. The calculator will then show you your projected amount of savings at the age you wish to retire.

457 Calculator

457 Payout Calculator

Use our 457 payout calculator to see how much contractually guaranteed yearly income you can receive from an annuity for the rest of your life using your 457 balance at the time of your retirement.

To use the calculator simply:

  1. Enter your age.
  2. Input your resident state.
  3. Input your current 401(a) balance,
  4. When would you like your payments to begin (Start My Benefits)?

457 Withdrawal Comparison

Historically financial advisors recommend withdrawing 4% from your 457 plan and adjusting for inflation. However, the 4% rule has been debunked as a safe withdrawal rate. New research concludes as low as 2.8% is the new rule. The following table compares rolling your 457 into a new annuity with a guaranteed lifetime withdrawal benefit

FeaturesAnnuity457(b)IRARoth IRA
Withdrawal Percentage5.20% – 6.55%4%4%4%
Can Income Increase?YesYesYesYes
Can Income Decrease?NoYesYesYes
How Long Will Money Last?Lifetime30 Years+30 Years+30 Years+
Annual Fees0 – 1.50%1% – 4%1% – 4%1% – 4%
Death BenefitAccount BalanceAccount BalanceAccount BalanceAccount Balance

Example: A 60-year-old retiree starts withdrawing immediately from their $1 million portfolio, they would receive:

457 Plan Basics

The 457 retirement plan is a tax-advantaged deferred compensation retirement plan available primarily to government and certain non-profit organization employees. Here’s a rundown of its basics:

What It Is

A 457 plan is a type of non-qualified, tax-advantaged, deferred compensation retirement plan. It is used by state governments, local governments, and some non-profit organizations. The plan allows employees to save for retirement while deferring income taxes on the saved money and earnings until withdrawal.

Who Is Eligible

Eligibility for a 457 plan is generally limited to employees of state and local government agencies and certain non-profit organizations under IRS code 501(c). Each employer’s plan specifies exactly which employees are eligible to participate.

How It Works

Participants in a 457 plan can defer a portion of their salary into the plan. These contributions are typically made on a pre-tax basis, meaning they reduce the participant’s taxable income. The funds in the account grow tax-deferred until they are withdrawn, typically after retirement. Unlike 401(k) plans, 457 plans do not usually incur a 10% penalty for withdrawals prior to the age of 59½, making them particularly advantageous for those who retire early or change jobs.

Contribution Limits

For 2024, the basic contribution limit for a 457 plan is $23,000. This limit is generally indexed annually for inflation. Participants aged 50 and older can make additional catch-up contributions of $7,000. Some plans also allow a special catch-up contribution of an additional $23,000 if the participant is within three years of the plan’s normal retirement age, potentially doubling the standard limit.

457 Calculator

Next Steps

Retirement planning doesn’t have to be one size fits all. Depending on your unique circumstances and goals, several ways to save for retirement can give you the peace of mind you deserve. Our 457-employee savings plan calculator is an excellent tool for estimating how much you need to save. And for those looking for guaranteed income in retirement, an annuity with a GLWB rider may be the right solution. Contact us today for a quote.

457 Retirement Plan

Get Help With Your 457 Retirement Plan

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Frequently Asked Questions

How much should I put into a 457 plan?

The amount a participant can contribute to their 457(b) plan annually cannot exceed either 100% of the participant’s taxable compensation or the elective deferral limit ($23,000 in 2024).

What happens if I contribute too much to my 457 plan?

If you defer too much compensation into an eligible deferred compensation plan, you may jeopardize the plan’s status under IRC Section 457(b) unless you act quickly to correct the issue.

When can I withdraw from my 457 without penalty?

With a 457 account, you can withdraw without being penalized at any age. However, if you try to withdraw money from other retirement savings plans before reaching the minimum age (55 or 59½, depending on the plan), you will be charged a 10% penalty.

Can I withdraw from my 457(b) to buy a house?

You cannot withdraw money from a 457 plan at any point for any reason until you leave employment.

How much tax will be taken out of my 457 withdrawal?

Suppose you take an eligible rollover distribution from your governmental 457(b) plan. In that case, the government will withhold 20% of the distribution for income taxes unless you directly roll it over into another governmental 457(b) plan, IRA, 403b plan, or qualified plan. This is because withdrawals from 457 retirement plans are taxed as ordinary income; however, distributions from a ROTH 457 Plan are not subject to taxation.

Is Roth IRA better than 457?

Your Roth IRA will be most beneficial if tax rates increase when you retire, as your withdrawals would be tax-free. However, if taxes lessen when you retire, your 457 accounts will work more in your favor from a financial perspective. In other words, having both types of accounts can help stabilize things.

What is the average 457 balance by age?

The average 457 balance by age varies significantly. In general, younger individuals tend to have lower balances, while older individuals have higher balances. According to recent data, the average 457 balance for those in their 20s is around $5,000, while those in their 60s have an average balance of around $150,000. These figures are subject to individual circumstances and contributions.

What is the difference between a 457 plan and a 401(k)

The main difference between a 457 and a 401k plan lies in eligibility and the specifics of contributions. A 401k is generally for private sector employees, allowing pre-tax contributions up to IRS-set limits, growing tax-free until withdrawn. Conversely, a 457 is for government and some non-profit employees, with similar tax benefits but potentially higher catch-up contributions for eligible employees based on their employer’s plan. Both plans tax withdrawals as income.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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