457(b) contribution limits 2026: a second limit for public employees

A 457(b) has its own limit

Deferred compensation plans of states, cities, counties, school districts and other public bodies are governed by section 457, not by section 402(g). Notice 2025-67 sets both limits at the same figure for 2026 but lists them separately (Notice 2025-67). The practical consequence is large: deferrals to a 457(b) are not added to deferrals to a 401(k), a 403(b) or the federal Thrift Savings Plan when the IRS checks your personal limit, and the reverse is also true.

One detail sets the 457(b) apart from the other plans. Its limit covers everything that goes into it for the year, employee deferrals and employer contributions together. A city that puts $2,000 of its own money into your 457(b) leaves you $22,500 of deferral room in that plan. Most public employers fund their pension instead and put nothing in the 457(b), so this rarely bites, but it is worth checking before setting a payroll election at the maximum.

Double deferral in practice

Take three people. A firefighter born in 1974 earns $85,000; she is 52 at the end of 2026, so each plan accepts the base plus $8,000: $32,500 and $32,500, $65,000 in total, about 76 % of her pay. A city engineer born in 1964 turns 62 and gets the larger catch-up in both plans, $71,500 on a $120,000 salary. A police officer born in 1990 earning $40,000 is held back by pay: after $24,500 in the 403(b) only $15,500 of salary is left for the 457(b), and nobody can defer more than they earn.

Whether doubling up makes sense depends on cash flow more than on the limit. Pre-tax deferrals in both plans cut taxable wages by the full amount; Roth deferrals, where the plan offers them, do not. The Roth catch-up rule applies to governmental 457(b) plans too: with 2025 FICA wages from the employer above $150,000, catch-ups in each plan must be Roth (Roth catch-up rule).

No 10 % early withdrawal tax after you leave

The additional tax of section 72(t) applies to qualified plans, 403(b) plans and IRAs, but not to distributions from a governmental 457(b). Once you separate from service, the account can be drawn at 45 or 52 with ordinary income tax only. This is why public employees who plan to retire before 59 and a half often favor the 457(b) when they cannot fill both plans. Two cautions: amounts rolled into the 457(b) from an IRA or another type of plan keep their own early withdrawal tax, and rolling the 457(b) itself into an IRA brings the IRA rules with it. Required minimum distributions start at the same age as for other plans.

The special catch-up of the last three years

Governmental 457(b) plans may offer a second kind of catch-up, written in section 457(b)(3). It is available in the three taxable years that end before the year you reach the normal retirement age named in the plan, and lets you make up for limits you did not use in earlier years with that employer. The amount allowed is the lesser of twice the regular limit, $49,000 in 2026, and the regular limit plus the part of the regular limit you left unused in earlier years, so it depends on your deferral history (Publication 4484). The IRS adds that this special catch-up can still be made pre-tax, even for someone whose age 50 catch-up must go in as Roth (IRS 457(b) page).

The special catch-up and the age 50 catch-up cannot be stacked in the same year: you use whichever gives the larger amount. A 62 year old who qualifies for the three-year catch-up and has a large unused balance may get more from it than from the $11,250 age catch-up; someone with little unused room is better off with the age amount. Because it rests on the plan's retirement age and on your records, the calculator above does not compute it; the plan administrator does.

Nongovernmental 457(b) plans are a different product

Hospitals, universities and other tax-exempt employers can also offer a 457(b), usually to a small group of highly paid staff. It shares the $24,500 figure, but the money stays the employer's property until paid out and is exposed to its creditors, the age catch-ups do not apply, and the account cannot be rolled into an IRA. The no-penalty withdrawal rule above is the same in substance, but the risk profile is not. For a 403(b) at the same employer see the 403(b) limit page; for one deferral limit alone, the 401(k) page.

With only the 457(b), the firefighter of the first example can defer $32,500 in 2026, which shows how much of the room of a public employee depends on whether a second plan is on offer.