What Is W-2 Code G? 457(b) Limits, Distributions, and Code EE

Code G in Box 12 of your W-2 is the total pre-tax amount you and your employer contributed during the year to a Section 457(b) deferred compensation plan. That dollar figure has already been subtracted from the wages in Box 1, so it lowers your federal income tax for the year, but it stays included in your Social Security and Medicare wages in Boxes 3 and 5.¹

What the Code G Amount Includes

Box 12 uses letter codes to break out specific kinds of compensation and benefits. The number reported with Code G is the combined total of the money you elected to defer from your paycheck plus any employer contributions, including nonelective contributions, directed into a 457(b) plan on your behalf.¹

A 457(b) is an eligible deferred compensation plan under Section 457 of the Internal Revenue Code, offered through state and local governments and certain tax-exempt organizations.² It’s separate from 401(k) and 403(b) plans and follows its own contribution, distribution, and rollover rules.

How Code G Changes the Numbers on Your W-2 and Return

Pre-tax 457(b) contributions lower your federal taxable wages for the year they’re made. The Code G amount is excluded from Box 1, the wage figure used to calculate federal income tax.¹ If your gross pay is $80,000 and you deferred $10,000 into the plan, Box 1 will read $70,000.

That same $10,000 is still subject to FICA. Your deferrals remain in Box 3 (Social Security wages) and Box 5 (Medicare wages), and your employer withheld Social Security and Medicare taxes on them at the time of deferral. That’s why Boxes 3 and 5 will usually be higher than Box 1 on the W-2 of anyone contributing to a 457(b).

You don’t need to do anything special on your federal return for Code G. Your employer already reduced Box 1, so the tax break happens automatically. It shows up not as a deduction you claim, but as income that was never in Box 1 to begin with. When you eventually take the money out in retirement, distributions are reported on Lines 5a and 5b of Form 1040 as pension and annuity income and taxed as ordinary income in the year you receive them.³

States handle this differently. Some tax 457(b) deferrals at the state level in the year contributed rather than the year distributed. If your state wages on the W-2 differ from Box 1, that’s usually why. Check your state tax agency’s guidance if you need to confirm the treatment.

Code G Versus Code EE

If your 457(b) is offered by a governmental employer, the plan may allow Roth (after-tax) contributions. Those Roth deferrals are reported separately under Code EE in Box 12, not under Code G.¹ Seeing both codes on the same W-2 means part of your contribution went in pre-tax (Code G) and part went in after-tax (Code EE). Non-governmental 457(b) plans don’t offer a Roth option.

Contribution Limits Behind the Code G Figure

For 2026, the standard elective deferral limit for a 457(b) plan is $24,500.⁴ The cap covers everything going into the plan for you in a year, employee and employer combined, and can’t exceed the lesser of $24,500 or 100% of your includible compensation.⁵

An important quirk: the 457(b) limit is separate from the limits on 401(k) and 403(b) plans. If you participate in a 403(b) and a 457(b) at the same employer, common for public school and state university staff, you can max out both.⁶

Under the SECURE 2.0 Act, participants who are 60, 61, 62, or 63 during 2026 qualify for an enhanced catch-up of $11,250 instead of $8,000, for a total of $35,750.⁴ At 64, you go back to the standard age-50 amount.

The 457(b) also has a special catch-up that no other plan type offers. In each of the three years before you reach the plan’s designated normal retirement age, you can contribute up to the lesser of twice the standard annual limit or the standard limit plus unused contribution room from prior years.⁵ For 2026, twice the limit is $49,000. You can’t stack the three-year catch-up and the age-50 catch-up in the same year; you use whichever gives the larger amount.

If your Code G figure looks off compared with what you thought you deferred, these separate buckets and limits are usually the reason.

When the Money Comes Out

Governmental 457(b) plans have one feature worth knowing at tax time, even if you’re not withdrawing yet: distributions aren’t subject to the 10% early withdrawal penalty, no matter your age.⁷ If you leave the sponsoring employer at 45, you can start taking money out and owe only ordinary income tax on it. The one exception is money rolled into your 457(b) from a 401(k), 403(b), or IRA; those funds keep the 10% penalty attached until age 59½.

Distributions generally become available when you separate from service. Most plans also allow distributions once you reach age 70½, even if you’re still working.

Required Minimum Distributions

Like 401(k) and 403(b) plans, 457(b) accounts are subject to required minimum distributions. Withdrawals must begin the year you turn 73.⁸ If you’re still working for the sponsoring employer past 73, you may be able to delay RMDs from that plan until you actually retire. Accounts left behind at former employers can’t be delayed.

Missing an RMD triggers a 25% excise tax on the shortfall, which drops to 10% if you correct it within two years.

1
Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
2
Office of the Law Revision Counsel. 26 US Code 457 – Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations
3
Internal Revenue Service. 2025 Instructions for Form 1040
4
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
5
Internal Revenue Service. Retirement Topics – 457(b) Contribution Limits
6
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
8
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs