Both 403(b) and 457(b) plans are tax-advantaged retirement savings options offered by certain employers. Some people are eligible for both. If so, it's important to know what their differences mean for your specific financial situation and goals before deciding which one to participate in—or if you want to contribute to both.
Here's what you need to know about how the features of a 403(b) vs. 457(b) stack up and what to consider when choosing between them.
What are 403(b)s and 457(b)s?
Both
- Traditional 403(b) and 457(b) accounts are funded with pre-tax dollars. The taxes on your contributions and the taxes on any investment growth over the years are deferred until you withdraw money from the account.
Roth 403(b) andRoth 457(b) accounts are built using after-tax dollars. You'll pay income tax on the money the year you earn it, but you can withdraw your contributions tax-free. Plus, the investment growth over the years may also be tax-free if you meet the requirements for qualified withdrawals.
Main differences between 403(b) and 457(b) plans
Regardless of whether they're traditional or Roth, 403(b)s and 457(b)s differ in key ways, including annual employer matching contribution limits, catch-up contribution limits, early withdrawal penalties and the potential for loans. For the most part, though, they're offered by similar employers, and the annual contribution limits for both are the same.
Side-by-side comparison
Here's a comparison of 403(b) and 457(b) features and how they differ from 401(k)s in 2025:
| | 403(b) | 457(b) | 401(k) |
| Type of employer | Public education systems, including K-12, higher education, and other boards and organizations involved with public education Certain 501(c)(3) nonprofit organizations, such as charities, hospitals, research foundations, private schools, and religious institutions | Governmental: State and local governments, including public agencies (health, safety, transit, utility, etc.) and public education systems (including K-12, higher education, and other boards and organizations involved with public education) Nongovernmental: Certain 501(c)(3) nonprofit organizations, such as charities, hospitals, research foundations, private schools, and religious institutions | Private-sector employers Nonprofit organizations without 501(c)(3) status or that don't qualify for 403(b) or 457(b) |
| Employee contribution limit | $23,500 annually | $23,500 annually | $23,500 annually |
| Employer contributions | Employers often provide matching contributions, with a combined employee-employer annual limit of $70,000 (or 100% of your salary, whichever is less) | Employer matching contributions are rare, and they count toward the $23,500 annual limit | Employers often provide matching contributions, with a combined employee-employer annual limit of $70,000 (or 100% of your salary, whichever is less) |
| Catch-up contributions | Ages 50 and older can contribute an additional $7,500 annually Ages 60-63 have a higher catch-up contribution limit of $11,250 annually Employees with at least 15 years of service can contribute an additional $3,000 annually, capped at $15,000 in a lifetime | Ages 50 and older can contribute an additional $7,500 annually Ages 60-63 have a higher catch-up contribution limit of $11,250 annually Employees with at least 15 years of service can contribute an additional $3,000 annually, capped at $15,000 in a lifetime | Ages 50 and older can contribute an additional $7,500 annually Ages 60-63 have a higher catch-up contribution limit of $11,250 annually |
| Early withdrawal penalties | 10% tax penalty if not at least 59½ or meet an exception Possible exception for people who separate from service in the year they turn age 55 and older | 10% tax penalty if not at least 59½ or meet an exception (gov't 457 plans) No penalty regardless of age if you've separated from your employer, but only with governmental 457(b) plans | 10% tax penalty if not at least 59½ or meet an exception Possible exception for people who separate from service in the year they turn age 55 and older |
| Possibility of loans | Loans are possible, although it's entirely up to the employer and the plan provider whether to allow them—but they're usually available | With governmental plans, loans are possible, although it's entirely up to the employer and the plan provider whether to allow them—but they're sometimes available Nongovernmental plans usually don't allow loans because the plan's assets are technically the employer's property until they're distributed | Loans are possible, although it's entirely up to the employer and the plan provider whether to allow them—but they're usually available |
| RMDs | Required for traditional accounts; not required for Roth accounts | Required for traditional accounts; not required for Roth accounts | Required for traditional accounts; not required for Roth accounts |
Employer contribution differences with 403(b) and 457(b)
Many employers offer
- Matching contributions to a 403(b) plan don't count toward the $23,500 employee contribution limit. Instead, the combined annual total from both employee and employer has a limit of $70,000 (plus catch-up contributions, if you're eligible).
- Employer contributions to a 457(b) plan count as part of the employee's $23,500 annual contribution limit (plus catch-up contributions, if you're eligible).
Because of those rules, it's not unusual for a 403(b) to have employer matches, but employer contributions to a 457(b) are rare since they would effectively reduce the employee's maximum annual contribution.
Catch-up contribution differences for 403(b)s and 457(b)s
Retirement savers with 403(b)s and 457(b)s have different rules for bulking up with extra contributions. Both allow
- Participants in 403(b) plans who have been with their employer for at least 15 years can contribute an additional $3,000 per year up to a lifetime limit of $15,000 if they haven't fully funded their contribution limits in prior years. This isn't an option with 457(b) plans.
- Participants in 457(b) plans who are in their last three years before retirement can give up the usual catch-up contribution opportunities and instead contribute as much as double the annual employee contribution limit for those years. The double contributions are limited to any previously unmet maximum contribution, but if you haven't been maximizing your annual limits, this could be a big advantage. This isn't an option with 403(b) plans.
Withdrawal differences for 403(b) and 457(b) plans
Most retirement accounts are designed to charge a 10% tax penalty if you take money out before reaching age 59½. The idea is for you to leave your money untouched until you're closer to retirement age.
With 403(b) and 457(b) plans, that's still the case—but with exceptions:
- If you have a 403(b) plan, in the year you turn 55 or later and have separated from your employer, you may be able to withdraw money from the account without a penalty. Of course, you may still owe income tax.
- If you have a governmental 457(b) plan and you've separated from your employer, there's no penalty at any age for withdrawing money from the account—although, again, you may still owe income tax.
It's crucial as you weigh these options to consult not just your financial advisor but a tax professional who knows the nuances of how taxes and penalties apply to retirement accounts.
Can you have both a 403(b) & 457(b)?
Yes, if your employer offers both plans, you can participate in both. One potential advantage to this is that 403(b) and 457(b) annual contribution limits are separate, so contributions to one don't count against the limit of the other. You could max out both of them if you wanted to. You can also have a 403(b) or 457(b) and an IRA because IRAs are always separate from employer-sponsored plans.
Which is better: 403(b) or 457(b)?
Neither one is a total standout over the other because it depends entirely on what fits your needs. So if you have to choose between them, consider their features and how they would work for your financial situation and goals.
Here are some considerations that may help if you need to make a decision (although remember that you can choose both):
When to choose a 403(b)
- Your employer offers a matching contribution that isn't available for the 457(b).
- You want to be able to make larger catch-up contributions after 15 years of service.
- You don't think you'll access your retirement funds before age 59½ (or age 55 if you think you'll be separated from your employer).
- The potential ability to take a loan from your retirement account is important to you.
When to choose a 457(b)
- You think you'd take advantage of having three years of double the annual contribution limit before retirement.
- You want to be able to access the money penalty-free at any time after leaving your employer, whether it's to retire early or for another reason.
- You already contribute to another employer sponsored retirement plan, and you want a way to save more on top of that.
- Being able to borrow from your retirement plan isn't a factor in your financial strategy.
What about 457(f) plans?
457(f) plans are a type of deferred compensation plan offered to highly compensated employees. They differ in virtually all aspects from 457(b) plans. Key differences include:
- Generally, only employers contribute to 457(f) plans.
- 457(f) benefits are unfunded, which means employees could lose them if the employer is unable to pay them later.
- 457(b) earnings are taxed on withdrawal, but 457(f) benefits become taxable when there is no longer a substantial risk of forfeiture, whether you make a withdrawal or not.
Work with an expert on retirement planning
Thrivent financial advisors are trained to help you make tax-efficient choices that ensure you're on the best path for retirement, including whether a 403(b) or 457(b) is the best option for you. Reach out to your
