For 2026, the ceiling on how much you can contribute to your 457 plan is $24,500 in elective deferrals, and the short answer to how much you should put in is: as close to that ceiling as your budget will bear, especially if you have a governmental plan.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The right number for you depends on your tax bracket, whether you have a second retirement plan at work, how close you are to retirement, and whether your plan is offered by a government employer or a tax-exempt one. Those four questions do most of the work.
The 2026 Ceiling
Federal law caps 457(b) deferrals at the lesser of 100 percent of your includible compensation or the annual IRS dollar limit.2Office of the Law Revision Counsel. 26 USC 457 – Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations For 2026 that dollar limit is $24,500, up from $23,500 in 2025.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Only your paycheck deferrals count toward the cap; investment growth inside the account does not.
If you change your deferral rate partway through the year or take irregular pay, check your statements. Going over the cap creates tax problems, and payroll systems do not always catch a mid-year adjustment.
Extra Room If You Are 50 or Older
Older workers have more headroom, and 457(b) plans actually offer two catch-up tracks. You can only use one in a given tax year.
Age 50 Catch-Up
If you turn 50 or older during 2026, your plan can let you defer an additional $8,000 on top of the standard limit, for a total of $32,500.3Internal Revenue Service. Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits
Ages 60 Through 63
SECURE 2.0 created a higher catch-up tier for participants who are 60, 61, 62, or 63 during the tax year. For 2026, those workers can contribute up to $11,250 in catch-up deferrals, bringing the total potential deferral to $35,750.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The enhanced window closes at 64, when you drop back to the regular $8,000 catch-up.
The Special Three-Year Catch-Up
This one is unique to 457(b) plans. In each of the three years before your plan’s designated normal retirement age, you can contribute up to double the standard limit if you have unused contribution room from prior years. For 2026 that ceiling is $49,000.4Internal Revenue Service. Retirement Topics – 457(b) Contribution Limits The calculation looks back at every year you were eligible for the plan and identifies amounts you could have deferred but did not. If you consistently maxed out early in your career, this catch-up will not help much because there is no unused room to recapture.
You cannot combine the age-based and three-year catch-ups in the same tax year. Your plan administrator applies whichever produces the higher limit.4Internal Revenue Service. Retirement Topics – 457(b) Contribution Limits The three-year version tends to win only for people who undercontributed for several years.
Why the 457(b) Usually Deserves Priority
Two features push the 457(b) to the front of the line when you are deciding where a limited savings dollar should go.
First, its contribution limit runs on a separate track from the cap on 401(k) and 403(b) plans. The elective deferral ceiling in 26 U.S.C. § 402(g) covers 401(k) and 403(b) contributions but does not include 457(b) deferrals.5Office of the Law Revision Counsel. 26 USC 402 – Taxability of Beneficiary of Employees Trust If your employer offers both a 403(b) and a governmental 457(b), you can put $24,500 into each, sheltering $49,000 before any catch-ups. Many state universities, school districts, and hospital systems set it up this way. Even contributing modestly to a second plan on top of a maxed-out 403(b) compounds meaningfully over a long career.
Second, governmental 457(b) distributions are not subject to the 10 percent early withdrawal penalty that applies to 401(k) and 403(b) plans.6Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions Once you separate from your employer, you can begin taking distributions at any age and owe only regular income tax. No 59½ requirement, no special exception needed. A teacher retiring at 55 or a public safety worker leaving at 50 can tap the 457(b) immediately without the penalty a 403(b) would trigger. One caveat: money you rolled into the 457(b) from a 401(k) or IRA can still carry the early-distribution penalty on the rolled-in portion, so track those dollars separately.
Those two features together are why the standard advice is to fund the 457(b) first, or at least to make sure it gets a real share of your retirement dollars rather than sitting empty next to a maxed-out 403(b).
When to Hold Back: Non-Governmental Plans
The picture changes if your 457(b) is offered by a tax-exempt employer such as a hospital or charity rather than a government. Non-governmental plans must remain unfunded, meaning the assets technically belong to the employer and sit in what is known as a rabbi trust. If the employer is sued or goes bankrupt, your deferred compensation is available to general creditors, and employees rank below those creditors.7Internal Revenue Service. Non-Governmental 457(b) Deferred Compensation Plans You also cannot roll a non-governmental 457(b) into an IRA or another retirement plan when you leave.
That creditor exposure is a real input into the contribution decision. Deferring every allowable dollar into an account your employer’s creditors can reach is a different calculation than funding a protected government trust. If you are in a non-governmental plan, weigh the tax benefit against your employer’s financial health, and consider diversifying across the plan and personal savings you hold outside it.
Pre-Tax or Roth
Many governmental 457(b) plans now offer a Roth option. Pre-tax contributions cut your taxable income today; Roth contributions do not, but qualified withdrawals in retirement come out tax-free, including all the investment growth. Tax-free treatment requires the distribution to occur after age 59½ (or due to death or disability) and at least five tax years after your first Roth contribution to the plan.8Internal Revenue Service. IRC Section 457(b) Eligible Deferred Compensation Plan – Written Plan Requirements
Pre-tax makes more sense in real dollars when you are in a high bracket now and expect a lower bracket in retirement. A worker in the 24 percent federal bracket who defers $24,500 saves roughly $5,880 in federal income tax that year. Roth tends to favor workers earlier in their career or in a lower bracket today than they expect later. Most plans let you split contributions between the two, as long as the combined total stays within $24,500.
One rule change to keep on your radar: SECURE 2.0 requires high earners to make their catch-up contributions as Roth contributions. The IRS finalized rules providing that this requirement generally takes effect for taxable years beginning after December 31, 2026, with a later start date for many governmental plans.9Internal Revenue Service. Treasury, IRS Issue Final Regulations on New Roth Catch-Up Rule, Other SECURE 2.0 Act Provisions If you earned above $145,000 in FICA wages in the prior year, your catch-up dollars will eventually need to go into a Roth bucket. For 2026, that rule has not yet kicked in for most 457(b) participants.
A Practical Way to Pick a Number
Start from the ceiling and work backward against what your paycheck can actually spare. Then adjust:
- If your plan is governmental and you have a 403(b) or 401(k) alongside it, funding both is the highest-leverage move in the tax code available to you. Put at least some money in the 457(b) even if you cannot max both, because of the penalty-free access after separation.
- If your plan is non-governmental, size your contribution to the tax benefit you actually need, not to the ceiling. Diversify what would otherwise be creditor-exposed dollars into savings outside the plan.
- If you are 50 or older, factor the catch-up into your target before deciding you have already saved enough. The extra $8,000 (or $11,250 in the 60-63 window) is real tax-advantaged room.
- If you are within three years of your plan’s normal retirement age and undersaved in earlier years, ask your plan administrator to run the special three-year catch-up calculation.
If the full $24,500 is out of reach, a good discipline is to bump your deferral by one percent of pay each year, or to redirect part of every raise into the plan before you get used to spending it. The compounding over a 20- or 30-year career is substantial. The contribution limits are a ceiling, not a target. Contribute what you can sustain without creating cash-flow problems, and push higher when raises or paid-off debts free up room.