457(b) Retirement Plan

What is a 457(b) Plan?

A 457(b) plan is a retirement plan available to employees of state and local government agencies and entities tax-exempt under section 501(c) of the Internal Revenue Code. Employees can make contributions to a 457(b) plan through pre-tax salary reduction. Contributions and investment earnings in a 457(b) plan are tax-deferred until distributed, presumably at retirement, at which time they are taxed as ordinary income. A 457(b) plan may also offer a designated Roth account. Contributions to a Roth account are taxed currently and if certain conditions are met, earnings will be taken tax-free when distributed.

The Internal Revenue Code allows funds for 457(b) plans to be invested in annuities and mutual fund custodial accounts.

Benefits of a 457(b) Plan

  • Contributions through payroll reduction reduce your current taxable income (except Roth contributions).
  • Higher annual contribution limits than Individual Retirement Accounts(IRAs).
  • Income taxes are deferred until withdrawal at retirement.
  • Creates a disciplined approach to retirement planning through regular payroll reduction.

Horace Mann Life Insurance Company underwrites Horace Mann annuities. Annuities should be considered long-term investments. If you take your money out early, you could be subject to an additional 10 percent federal income tax. In addition, withdrawals on tax-qualified contracts may be restricted by the IRS or your employer’s plan. You should consult with your tax advisor regarding any tax-favored products. While an annuity is not required in order to obtain tax deferral within a 457(b) or other tax-qualified retirement plan, an annuity offers additional benefits. In order to offer these benefits there are additional charges and fees in the annuity.



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