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Retirement Plan Types

The Plan offers two ways to invest for your retirement:

  • 457(b) traditional pre-tax contributions
  • 457(b) Roth after-tax contributions

The Plan was created to serve New York public employees and their beneficiaries. The money you contribute is automatically deducted from your pay and invested according to your direction. The money you contribute to your Plan account and any earnings could potentially grow over time.

You decide how you want to be taxed:

  • With traditional pre-tax contributions, you can defer income taxes on contributions and earnings until you make withdrawals from your Plan account in retirement, potentially lowering your taxable income now.
  • With post-tax contributions (Roth 457(b)), you pay income taxes on your contributions right away so that your distributions in retirement are tax-free, as long as Roth tax requirements are met.

You can even split your contributions between traditional, pre-tax contributions and Roth 457 contributions.

Features of a traditional 457 account Features of a Roth 457 account
Your contributions are tax-deferred – so your federally taxable income as well as your New York State taxable income is reduced by the amount of money you contribute to your Plan account. You pay federal and New York State income taxes on your contributions.
Your contributions and any earnings are tax-deferred until you make withdrawals – so there's more growth potential. Withdraw your contributions and any earnings tax-free – as long as the distribution is made after 5 consecutive tax years since the first contribution was made and the distribution is made after age 59½, or because of death, or disability.
All withdrawals are taxed as ordinary income. Distributions made prior to 59½ may be subject to a 10% penalty tax.
Your money can stay tax-deferred in your account – even when you separate from service or retire. This may allow you lower cost investing through the Plan as you continue managing your retirement assets. Keep in mind that investing involves market risk, including possible loss of principal. Your money can stay in your account – even when you separate from service or retire. This may allow you lower cost investing through the Plan as you continue managing your retirement assets. Keep in mind that investing involves market risk, including possible loss of principal.
New York State residents who are at least age 59½ and take periodic payments are entitled to a New York State income tax deduction of up to $20,000 each calendar  year on payments received from the Plan and other retirement plans.

For more information about what specific funds are available for investment, visit What Are My Investment Options? and review the profiles and prospectuses.

Learn more about how the Roth 457 plan option (PDF) works. Also, learn about how to convert your traditional 457(b) account into a Roth 457 (PDF).

Get the help you need

Talk to your Account Executive for more information about investment options available through the Plan. Neither the Plan nor its representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions.

Please note that all investments carry some risk including the possible loss of your principal.

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