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Teachers and hospital workers get TWO $24,500 buckets. Most only use one.
The 457(b) is the best retirement account most public employees have never maxed. Because it lives under a different tax-code section, its $24,500 limit (2026) is completely separate from the 403(b) or 401(k) limit — a school-district or hospital employee can shelter $49,000 pre-tax in 2026, $65,000 at 50+, and up to $81,500+ in the three-year pre-retirement window when the 457's special double catch-up kicks in. And the account has a superpower no 401(k) matches: governmental 457(b) withdrawals after separation carry no 10% early-withdrawal penalty at ANY age — it's the account that makes retiring at 52 work. This calculator computes your exact maximum across both plans, your catch-up tier, and the tax saved.
Public-sector employees use it when HR mentions "deferred comp": the 457 limit is separate from the 403(b) — $49,000 sheltered in 2026, $81,500+ in the final-3 window — and penalty-free withdrawals after separation make it the early-retirement account.
Yes — this is the headline. 401(k) and 403(b) deferrals share one §402(g) limit ($24,500 in 2026), but a governmental 457(b) has its OWN limit under a different section. A 52-year-old university employee can defer $32,500 into each — $65,000 pre-tax in one year. The stacking is legal, common at public universities and hospitals, and widely unknown: HR materials rarely present the two plans side by side. Note the reverse trap: if you have TWO 403(b) accounts (like a basic plus an SRA), those share one limit — only the 457 is truly separate.
The no-10%-penalty rule applies to GOVERNMENTAL 457(b) plans after separation from service — any age, any reason. That makes it the perfect early-retirement bridge: retire at 52, live on 457(b) withdrawals until 59½, leave the 401(k)/IRA untouched. Two cautions: distributions are still ordinary income (penalty-free ≠ tax-free), and rolling the 457(b) INTO an IRA destroys the feature — the IRA's 59½ rule takes over. Early retirees should keep the 457(b) where it is. Non-governmental 457(b)s (some nonprofits) are a different animal entirely: no rollovers, distribution restrictions, and the money is exposed to the employer's creditors.
In the three calendar years before your plan's normal retirement age, a governmental 457(b) lets you defer up to DOUBLE the base limit — $49,000 in 2026 — but only to the extent you have unused room from prior years (years you were eligible but didn't max). It's a make-up provision, not a bonus. You cannot use it the same year as the age-50 catch-up — you take whichever is larger, which is nearly always the double. Perfect fit for the classic scenario: someone who under-saved for 20 years and wants to sprint the final three before their pension starts.