Investment Dictionary


A section of the Internal Revenue Code (IRC) that created a tax-deferred retirement plan for governmental employers, public school districts and certain other types of non-profit organizations. Voluntary contributions must be deducted from an employee\'s paycheck. Employer contributions and transfers/rollovers are other ways that a 457(b) account can be funded. A 457(b) account can be invested in a wide array of investments. A 457(b) plan is the responsibility of the employer under both federal and Texas law. This employer responsibility is greater than with 403(b) plans. Because of this involvement an employer has fiduciary responsibility for the 457(b) plan. The 457(b) is the only retirement account which does not carry a 10% early withdrawal tax penalty for distributions prior to age 59 1/2.

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