457(b) vs. Roth IRA: Which should you contribute to?

A 457(b) and a Roth IRA are two ways to save for retirement, and you don't necessarily have to choose between them. A 457(b) comes through your employer, usually a state or local government or certain nonprofits. A Roth IRA is an account you open yourself, as long as your income falls within certain limits.

The biggest difference is when each is taxed. A traditional 457(b) is funded with pretax contributions, so you generally pay income taxes when you withdraw the money. A Roth IRA is funded with after-tax dollars, allowing for tax-free growth and qualified withdrawals. Beyond that, they differ in how much you can contribute, when you can take money out and who's eligible.

Which one fits depends on your tax situation today, what you expect it to be in retirement and how much you're able to save. Here's how they compare.

At their core, a 457(b) and a Roth IRA do the same job. You put money in, it gets invested and has the potential to grow for years before you need it. Both have annual contribution limits, with catch-up options for older savers, and come with potential tax advantages.

One of the biggest differences between a 457(b) and a Roth IRA is eligibility. You can only contribute to a 457(b) if your employer offers one, while you can open a Roth IRA on your own if you meet the eligibility requirements.

Roth IRA eligibility requirements (2026)

You can also contribute considerably more to a 457(b) when compared to a Roth IRA. In 2026, the 457(b) contribution limit is $24,500. The combined limit for traditional and Roth IRAs is $7,500, though both accounts allow additional catch-up contributions for eligible investors.

Taxes, withdrawal rules and investment choices also set the two apart. With a 457(b), you're generally choosing from a menu of funds your plan offers and contributing through payroll deductions. With a Roth IRA, you pick the provider and have a wider range of investments to choose from.

With a traditional 457(b), you're generally contributing pretax dollars, so it can lower your taxable income for the year. From there, your money has the potential to grow tax-deferred, and you'll pay ordinary income tax when you eventually take it out. (Some plans also offer a Roth 457(b) option, which uses after-tax dollars much like a Roth IRA. We'll stick with traditional, pretax contributions here.)

A Roth IRA flips the tax treatment around. You contribute after-tax dollars, so there's no upfront break—but qualified withdrawals down the line, earnings included, come out tax-free. In short: 457(b) gives you the tax benefit now, Roth IRA gives it to you later. Neither one wins in every situation.

It comes down to 1) what your tax rate is now and 2) what you expect it to be in the future. If you’re in a higher tax bracket now but expect lower income in retirement, the upfront tax break from a 457(b) may work in your favor. On the other hand, if you expect your tax rate to be higher down the road, tax-free Roth withdrawals might look more attractive.

Accessing your money works differently between the two accounts, and it also depends on which type of 457(b) you have.

If you have a governmental 457(b), once you leave the employer that sponsors your plan, you can typically withdraw the money without triggering the 10% early withdrawal penalty, even if you're under 59½. You'll still owe regular income tax on whatever you take out, though.

Nongovernmental 457(b)s follow rules set by the plan, and because the money technically belongs to your employer until it's paid out, it may be subject to the employer's creditors. Check your plan documents for the specifics.

Roth IRAs work differently. Since you've already paid taxes on your contributions, you can withdraw that money anytime, tax- and penalty-free. Earnings, however, or the growth your contributions have generated, have different withdrawal rules. To withdraw earnings tax-free, you'll need to meet the requirements for a qualified distribution, which means satisfying the five-year rule plus one other condition, like turning 59½.

This flexibility doesn't mean dipping into your Roth IRA early is always a good idea. Money you withdraw can no longer compound and potentially grow for retirement.

The accounts also differ when it comes to required minimum distributions (RMDs), which require you to begin withdrawing money from certain retirement accounts once you reach a specified age. Traditional 457(b) plans are subject to RMDs, while Roth IRAs don't require them during the original owner's lifetime.

Here's a quick look at the key differences to help you consider your options:

These differences don't necessarily point to one account being better than the other. What matters is how they line up with your retirement goals and financial situation.

Yes. Having a 457(b) doesn’t prevent you from contributing to a Roth IRA. As long as you have earned income and that income falls within the Roth IRA limits, you can contribute to both in the same year.

It depends on what you want your retirement savings to do for you and which features matter most.

A 457(b) may make more sense if you work for an eligible employer and want to save more while lowering your taxable income today. The 457(b)'s higher limit, payroll deductions and pretax treatment make that easier. Its special catch-up provisions can add even more room as retirement gets closer.

A Roth IRA may make more sense if you expect your income and tax bracket to rise, since paying tax now and withdrawing tax-free later can pay off. It may also fit if you want more investment choices, the flexibility to withdraw contributions without taxes or penalties if life changes and certain eligibility requirements are met, or no RMDs during your lifetime. And if you don't have a plan through work, a Roth IRA lets you save on your own as long as you meet the eligibility requirements.

If your budget allows, contributing to both means you get the benefits of saving through your employer plus the flexibility of your own account, and you're not putting all your retirement savings under one tax treatment.

Your retirement income will likely come from a mix of sources, such as employer plans, IRAs, Social Security, a pension or personal savings. Choosing a 457(b), a Roth IRA or both is really about how those pieces work together and how much flexibility you'll have when it's time to draw on them.

A Thrivent financial advisor can help you look at your retirement savings alongside the rest of your finances and figure out how it can all fit together for your unique financial goals.