A 457 plan is a tax-exempt deferred compensation program made available to employees of state and federal governments and agencies. Itās similar to a 401(k) plan, except there are no employer matching contributions and the IRS does not consider it a qualified retirement plan. Participants can defer some of their annual income (up to an annual limit), and contributions and earnings are tax-deferred until withdrawal. Distributions start at retirement age but participants can also take distributions if they change jobs or in certain emergencies. Participants can choose to take distributions as a lump sum, annual installments or as an annuity. Distributions are subject to ordinary income taxes and the amounts cannot be transferred into an IRA.

You as the employer can pick the vendors offering investments in the plan and change them if necessary. The employer can set all of the other rules. Federal laws make compliance for such plans much easier than for 401(k) plans since there are no "non-discrimination tests" to perform. Let us help you determine if this design best meets your needs.