403(b) vs. 457(b) Plans: What's the Difference?

Here's how 403(b) and 457(b) plans compare across eligibility, taxes, catch-up contributions, withdrawals, and rollover rules.

One of the most important differences between a 403(b) and a 457(b) is how contribution limits work. While both plans have the same employee contribution limit ($24,500 in 2026), the way those limits interact with other workplace retirement plans is different. 
 
A 403(b) generally shares the same employee contribution limit as a 401(k). That means that across both accounts, the maximum contribution amount is capped at $24,500.  

A 457(b), by contrast, generally has a separate annual contribution limit. That means contributing to a 457(b) won't reduce how much you can contribute to a 403(b) or 401(k). For example, in 2026, an eligible employee could contribute up to $24,500 to a 403(b) and another $24,500 to a 457(b), for a potential total of $49,000 before any applicable catch-up contributions.

403(b) plans may allow age-based catch-up contributions and, for some employees with at least 15 years of service, an additional catch-up of up to $3,000 per year, subject to a lifetime maximum of $15,000.  

457(b) plans may allow age-based catch-up contributions for governmental plans only. Both governmental and nongovernmental 457(b) plans may also offer a special 457(b) catch-up contribution for eligible employees within three years of normal retirement age, to contribute up to twice the annual employee contribution limit ($49,000 in 2026).

Some employers may contribute to employees' 403(b) or 457(b) accounts. Employer matching contributions can help boost retirement savings, but the rules differ between the two plans. 
 
With a 403(b), employer contributions don't reduce the amount an employee can contribute through payroll deductions. For example, if the annual employee contribution limit is $24,500 and your employer contributes $5,000 to your 403(b), you could still contribute up to $24,500. 

With a 457(b), employer contributions generally count toward the plan's annual contribution limit, which may reduce the amount an employee can contribute from their own paycheck. For example, if the annual employee contribution limit is $24,500 and your employer contributes $5,000 to your 457(b), you could only contribute the difference ($19,500). 

Because employer contribution rules can vary by plan, review your plan documents to understand whether your employer contributes and how those contributions affect your overall savings limits. 

A 403(b) generally shares the same employee contribution limit as a 401(k), which means contributions to one plan may reduce how much you can contribute to the other. A 457(b), by contrast, generally has a separate annual contribution limit. As a result, eligible employees may be able to contribute to both plans in the same year.

Withdrawal rules are another one of the biggest differences between 403(b) and 457(b) plans.

If you withdraw money from a traditional 403(b) before age 59½, you'll generally owe ordinary income tax plus a 10% early withdrawal penalty, unless an IRS exception applies. After age 59½, withdrawals are generally penalty-free, but distributions from traditional 403(b) accounts are still taxed as ordinary income.

Governmental 457(b) plans generally allow you to take withdrawals after leaving your employer without owing the 10% early withdrawal penalty, regardless of your age. However, distributions from traditional 457(b) accounts are still taxed as ordinary income.

Nongovernmental 457(b) plans generally follow different distribution rules than governmental plans. While these plans are generally not subject to the 10% early withdrawal penalty, participants may have less flexibility in deciding when and how funds are distributed. 
 
Depending on the plan, distributions may be paid according to a predetermined schedule after you leave your employer. In some cases, plans may allow participants to defer distributions, subject to plan rules and IRS requirements.

Roth contributions to a 403(b) or 457(b) may allow for qualified tax-free withdrawals. In general, earnings can be withdrawn tax-free once you turn 59½, have held the account at least five years, and meet any plan rules that apply.

The right choice depends largely on which retirement plans your employer offers. Some employees may only have access to a 403(b) or a 457(b), while others may be eligible for both. 
 
If you have access to both plans, one of the most important factors to consider is how much you're hoping to save for retirement. Because 457(b) contribution limits are generally separate from 403(b) and 401(k) limits, contributing to both plans may allow you to save more in tax-advantaged accounts. 

Employer contributions may also play a role in your decision. If one plan includes matching or other employer contributions, you may want to consider how those contributions fit into your overall retirement savings strategy. 
 
Before deciding, review each plan's investment options, fees, employer contributions, withdrawal rules, and rollover options. If you're eligible for both plans, contributing to both may help you maximize your retirement savings. Consider talking to a financial advisor to see what best fits your financial situation and goals.