2025 457(b) Contribution Limit
For 2025, the 457(b) Contribution Limit figures are $23,500 (Deferral limit), +$7,500 (Catch-up limit, age 50 and over) and +$11,250 (Catch-up limit, ages 60 through 63).
Effective 2025-01-01Source: Notice 2024-80 (IRS)Verified 2026-09-04
Compared with 2024
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Deferral limit | $23,000 | $23,500 | +$500 (+2.2%) |
| Catch-up limit, age 50 and over | +$7,500 | +$7,500 | +$0 (+0.0%) |
| Catch-up limit, ages 60 through 63 | -1 | +$11,250 | - |
- SECURE 2.0 Act § 109 added § 414(v)(2)(E), a larger catch-up limit for participants who turn 60 through 63 during the year, effective for taxable years beginning after 2024. No earlier year's law had this age band at all
Who it applies to
Employees of state and local governments and tax-exempt organizations who participate in deferred compensation plans under Section 457.
What changed this year, and why
Effective January 1, 2025, the IRS increased the elective deferral limit under Section 457 to $23,500.
Common questions
- What are Section 457 plans?
- These are deferred compensation plans for employees of state and local governments or tax-exempt organizations, allowing pre-tax contributions that grow tax-deferred until withdrawal.
Every amount on this page is a published figure rather than yours. The 457(b) contribution planner takes the number you enter and works it out against them, showing which published figure it used.
Your limit is the lesser of the dollar cap and your includible compensation
For 2025, the basic elective deferral limit for a section 457 plan is the lesser of your includible compensation or $23,500. Includible compensation is generally your Form W-2 wages plus any elective deferrals already made. It includes wages, salaries, fees for professional services, certain employer-provided qualified transportation fringe benefits, and other amounts received for personal services performed. Because the limit is the lesser of the two amounts, a participant whose includible compensation for the year falls below $23,500 cannot defer the full dollar cap. Amounts deferred under a section 457 plan count toward the overall elective deferral limit shared with other plans, so contributions elsewhere may reduce what you can put into the 457 plan.
If you’re a participant in a section 457 plan (a deferred compensation plan for employees of state or local governments or tax-exempt organ- izations), you should have deferred no more than the lesser of your includible compensation or $23,500 in 2025.
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
The special catch-up in the last 3 years before normal retirement age
A section 457 plan may allow participants who are within 3 years of normal retirement age to defer more than the basic annual limit. During any or all of those last 3 years before reaching normal retirement age, the plan can provide an increased limit equal to the lesser of twice the annual limit, which is $47,000 for 2025, or the basic annual limit plus any unused portion of the basic limit from prior years. The second option - using the unused basic limit - is only available if the participant is not also using age 50-or-over catch-up contributions for the same year. This special catch-up is determined by the plan's own definition of normal retirement age, so the window of eligibility varies by plan.
Increased limit. During any, or all, of the last 3 years ending before you reach normal re- tirement age under the plan, your plan may pro- vide that your limit is the lesser of: 1. Twice the annual limit ($47,000 for 2025), or 2. The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50-or-over catch-up contributions).
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
The age 50 catch-up, and who can use it
Participants in governmental section 457 plans who have reached age 50 may be eligible for additional catch-up contributions beyond the standard deferral limit. To qualify, you must have reached age 50 by the end of the year, and no other elective deferrals can be made for you to the plan because of other limits or restrictions that would otherwise apply. If you meet these conditions, you can make additional elective deferrals above the basic $23,500 limit. This catch-up provision is available only to participants in governmental section 457 plans, not to those in plans maintained by tax-exempt organizations. The age 50 catch-up allows older workers to increase their retirement savings as they approach traditional retirement age. However, if you are within three years of your plan's normal retirement age and your plan provides the increased limit for that period, that alternative limit may be higher than the age 50 catch-up amount. Participants should consult their plan administrator to determine eligibility and the specific catch-up amount available under their plan's terms.
Catch-up contributions. You can gener- ally have additional elective deferrals made to your governmental section 457 plan if: • You reached age 50 by the end of the year, and • No other elective deferrals can be made for you to the plan for the year because of lim- its or restrictions.
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
The window to pull out an excess deferral closes April 15
If you defer more than the $23,500 limit into your 457(b) plan in 2025, the excess must be pulled out by April 15 of the year after the deferral was made. The plan distributes the excess amount plus any income it earned while sitting in the account. You must notify the plan by its required deadline of how much should be paid out, and if you participate in more than one plan, you can have the excess paid from any plan that permits these distributions. The excess deferral is included in your income for the year you made the deferral. If you fail to withdraw the excess by the April 15 deadline, you lose the ability to count it toward your cost basis, and it is taxed twice: once when you contribute it and again when you eventually receive it as a distribution from the plan.
The plan must then pay you the amount of the ex- cess, along with any income earned on that amount, by April 15 of the following year.
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
There is no form to file - your employer reports it on your W-2
Participants in a governmental section 457(b) plan do not file any separate form to report their elective deferrals to the IRS. Instead, the employer handles the reporting. Your employer generally should not include your elective deferrals in box 1 wages on your Form W-2. Rather, the employer marks the "Retirement plan" checkbox in box 13 of the W-2 and shows the total amount you deferred during the year in box 12. This means the deferral is visible to the IRS through your W-2, and you do not need to file any additional form to report the deferral itself. You still report the deferral on your tax return as part of your overall income calculation, but the employer's W-2 reporting is what communicates the deferral amount to the IRS. The $23,500 deferral limit for 2025 is tracked through this employer reporting process.
Reporting by employer. Your employer gen- erally shouldn’t include elective deferrals in your wages in box 1 of Form W-2. Instead, your em- ployer should mark the “Retirement plan” checkbox in box 13 and show the total amount deferred in box 12.
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
The 3-year catch-up lets you use limit you did not use in earlier years
A governmental section 457(b) plan may offer a special catch-up provision during the last 3 years before you reach normal retirement age under the plan. Under this provision, your deferral limit can be the lesser of twice the annual limit ($47,000 for 2025) or the basic annual limit of $23,500 plus the amount of the basic limit that you did not use in prior years. This means that if in earlier years you deferred less than the full $23,500 limit, you may be able to make up for some of that unused room during this 3-year window, potentially allowing you to defer more than the standard $23,500 in a single year. However, this special catch-up is only available if you are not also using the age 50-or-over catch-up contributions. The plan must specifically provide for this increased limit; it is not automatic.
During any, or all, of the last 3 years ending before you reach normal re- tirement age under the plan, your plan may pro- vide that your limit is the lesser of: 1. Twice the annual limit ($47,000 for 2025), or 2. The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50-or-over catch-up contributions).
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
Leave the excess in the plan and it is taxed twice
If you contribute more than the $23,500 deferral limit to your 457(b) plan and leave the excess amount in the plan rather than withdrawing it by the April 15 deadline, you face a significant tax consequence. The excess deferral must be included in your income for the year you made the deferral. However, if the excess is not distributed to you, you cannot include it in the cost of the contract even though you already included it in your income. This means you are taxed twice on the excess deferral left in the plan: once when you contribute it and it is added to your taxable income for that year, and again when you eventually receive it as a distribution from the plan. The only exception is if the excess deferral was a designated Roth contribution. To avoid this double taxation, you must ensure the excess amount is withdrawn by April 15 of the following year.
Therefore, you’re taxed twice on the excess deferral left in the plan—once when you contribute it, and again when you receive it as a distribution (unless the excess deferral was a designated Roth contri- bution).
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
A 457(b) limit does not share room with a 401(k) or 403(b)
IRS Publication 525 groups elective deferral plans into two sets for the annual limit. The first three plan types on its list - a section 401(k) plan, the Thrift Savings Plan, and a salary reduction SEP - share one combined limit. A section 457 plan is the seventh type on that same list, grouped instead with a SIMPLE plan, a section 403(b) plan, and a section 501(c)(18)(D) plan, each of which the publication says has its own specific plan limit rather than a share of the first group's combined figure. Because the publication treats a section 457 plan's limit as one of these separate, specific plan limits rather than folding it into the combined figure for the first group, a worker who defers into both a section 401(k) plan and a governmental section 457 plan in the same year is measured against two separately stated limits rather than one shared figure split between the two accounts. The same separation holds between a section 457 plan and a section 403(b) plan, since a section 403(b) plan is also one of the specific-limit plan types rather than part of the combined group.
of contributions to the plans listed in (1) through (3), earlier, unless you are age 50 or older. The specific plan limits for the plans listed in (4) through (7), earlier, are discussed later.
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2024-80 (IRS)
- Deferral limit
The limitation on deferrals under section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $23,000 to $23,500.
- Catch-up limit, age 50 and over
The limitation under section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in section 401(k)(11) or section 408(p) that generally applies for individuals aged 50 or over remains $7,500.
- Catch-up limit, ages 60 through 63
The limitation under section 414(v)(2)(E)(i) for catch-up contributions to an applicable employer plan other than a plan described in section 401(k)(11) or section 408(p) that applies for individuals who attain age 60, 61, 62, or 63 in 2025 is $11,250.