The maximum amount you can contribute to a 457 plan depends on your age and the details of the plan. These are the correct 457 plan contribution limits for 2009 and 2010. Contributions to qualified retirement plans (401(k), 403(b), SIMPLE, or SEP) do not affect your 457 plan contribution limits. You cannot contribute more than 100% of your compensation.
- Under age 49 at the end of the year: $16,500
- Age 50 or older by the end of the year: $22,000 (only in governmental 457 plans, otherwise the limit is $16,500)
Special 457 Plan Catch-up Contributions
If you are within 3 years of normal retirement age as defined by the 457 plan, you may be eligible to contribute up to an additional $16,500 per year. However, this special catch-up contribution is limited to your unused regular contribution limits from previous years. If you’ve contributed the maximum every year you’ve been in the plan, you won’t qualify for this special catch-up contribution. For more information, be sure to speak with your human resources department and consult the IRS website here and here.
Deadline for Contributions
Elective contributions are generally made from your paycheck, so you need to have your contributions set up within the year. You can choose to contribute everything at the beginning of the year if your plan allows it, or you can just contribute a certain amount or percentage from each paycheck.
Tax Deduction for Contributions
Your contributions to a 457 plan reduce your taxable income, so you do not need to claim a tax deduction on your return. However, you may be eligible for the Retirement Savings Contribution Credit if you contributed to a governmental 457 plan. Non-governmental 457 plan contributions will not qualify for that credit.