The following chart sets forth some primary differences among the different types of plans:

Type of plan	457(b) Plan	401(k) Plan	403(b) Plan	Deemed IRA
May state or local governmental employer maintain this type of plan?	Yes.	No, unless it has a grandfathered 401(k) plan.	Only if it is a public school or university, or a portion of another agency that is treated as an educational institution (e.g., an educational program for convicts that is part of a state prison system).	Yes.
Can a church employer that has not made an election under I.R.C. § 410(d) to be subject to ERISA ("nonelecting church") maintain?	A nonelecting church is exempt from I.R.C. § 457(b). Thus, it can maintain an unfunded deferred compensation plan, but is not subject to the I.R.C. § 457(b) requirements and cannot maintain a funded arrangement.	Yes.	Yes.	Yes.
Can a tax-exempt employer, other than a government or nonelecting church, maintain?	Only for highly compensated and management employees.	Yes.	Only if it is a § 501(c)(3) organization.	Yes.
Can the plan cover employees of related taxable entities?	No, although an unfunded deferred compensation plan can be maintained for highly compensated and management employees of taxable affiliates.	Yes.	No.	Yes. However, because a deemed IRA can be part of another kind of plan (e.g., 401(a) or 403(b)), a related taxable entity that also wishes to maintain a deemed IRA may have to use a different plan for the deemed IRA, if it is not eligible to maintain the plan of which the deemed IRA is a part.
Are there limits on elective deferrals?	Lesser of a dollar limit or 100% of pre-plan compensation. The dollar limit is $14,000 in 2005 and $15,000 in 2006, after which indexing for cost-of-living changes begins. 457(b) plans need no longer be combined with other plans in applying limits.	Lesser of a dollar limit or 100% of pre-plan compensation. The dollar limit is $14,000 in 2005 and $15,000 in 2006, after which indexing for cost-of-living changes begins. 401(k) plans need to be combined only with other 401(k) plans or 403(b) plans (not 457(b) plans) in applying limits.	Lesser of a dollar limit or 100% of pre-plan compensation. The dollar limit is $14,000 in 2005 and $15,000 in 2006, after which indexing for cost-of-living changes begins. Special catch-up elections are available for certain long-service employees or for the last three years of employment prior to normal retirement date. 403(b) plans need only be combined with other 403(b) plans or 401(k) plans (not 457(b) plans) in applying limits.	$4,000 in any one year. (This limit will rise to $5,000 for 2008, and will be subject to cost-of-living adjustments for years after 2008.) To the extent that an employee covered by a deemed IRA has income in excess of certain specified levels, and also participates in an employer plan, the deductability of contributions may be limited. However, contributions are not offset against other types of employer plans, but only against other IRAs or deemed IRAs.
Are catch-up provisions available to increase the maximum elective deferrals?	Catch-up available under 457(b)(3) for one or more of the participant's last 3 taxable years ending before he attains normal retirement age under the plan. Catch-up available under 457(e)(18) and 414(v) for governmental plans only, for participants age 50 or over. If both catch-ups apply, only the higher of the two, not both of the two, may be taken.	Catch-up available under 402(g) and 414(v), for participants age 50 or over.	Catch-up available under 402(g) and 414(v), for participants age 50 or over. Catch-up available under 402(g)(7) for employees who have at least 15 years of service with certain organizations. If both catch-ups apply, the individual can take the sum of the two.	No.
Are there limits on total contributions ?	Same as the limit on elective deferrals.	Lesser of $42,000 (for 2005; as indexed in later years) or 100% of pre-plan compensation. Other qualified plans are combined in determining the limit. 403(b) and 457(b) plans do not count in determining the limit for a governmental 401(k) plan.	Lesser of $42,000 (for 2005; as indexed in later years) or 100% of pre-plan compensation. Qualified plans, other than a plan maintained by a business the employee controls, do not count in determining the limit for 403(b) plans. 457(b) plans do not count in determining the limit for a governmental 403(b) plan. Other 403(b) plans are combined in determining the limit.	Same as the limit on elective contributions.
Is there an excise tax on excess contributions?	No.	Governmental plans are exempt.	Only if the 403(b) contract is a custodial account described in Code Section 403(b)(7), as opposed to an annuity contract.	Yes.
Can the plan provide for participant loans?	Yes, in the case of a governmental 457(b) plan, subject to maximum limits under 72(p) to avoid taxation of the participant; loans from other 457(b) plans will give rise to participant taxation.	Yes, subject to maximum limits under 72(p) to avoid taxation of the participant.	Yes, subject to maximum limits under 72(p) to avoid taxation of the participant.	No. A loan is always taxed as if it were a distribution.
What are other effects of violating limits on total contributions ?	In the case of a governmental plan that includes the limits in the plan but violates them administratively, the plan continues to be considered a 457(b) plan until the first day of the first plan year that begins more than 180 days after the date the IRS notifies the employer of the problem and will continue to be a 457(b) plan then if the employer has fixed the problem.	Disqualification of the plan.	Only amount in excess of the limits is taxable.	If the deemed IRA is a free-standing plan, only the amount in excess of the limits is taxable. However, if the deemed IRA is part of another plan (e.g., a 401(a) plan), a violation on the part of the deemed IRA can jeopardize the qualification of the entire 401(a) plan.
What is the effect of the vesting schedule on contribution limits?	No effect.	No effect.	Contributions count for Section 415(c) purposes only when they vest.	N/A. Contributions must be fully vested.
Can money be rolled in from a 401(k) or other qualified plan?	Yes, for a governmental 457(b) plan; no for nongovernmental plans.	Yes.	Yes.	Yes.
Can money be rolled in from a 403(b) plan?	Yes, for a governmental 457(b) plan; no for nongovernmental plans.	Yes.	Yes.	Yes.
Can money be rolled in from a 457(b) plan?	Yes, for a governmental 457(b) plan. For a nongovernmental 457(b) plan, similar results may in some instances be available through a plan-to-plan transfer.	Yes.	Yes.	Yes.
Can tax on distributions be deferred by rolling them into another plan or an IRA?	No for nongovernmental plans; yes for governmental plans. For nongovernmental plans, can defer taxes only by direct transfer to another 457(b) plan.	Yes.	Yes.	Yes.
Is there a trust requirement?	A governmental 457(b) plan must be funded by assets insulated from the claims of the employer's creditors, such as a trust or an insurance contract. A nongovernmental plan may not be funded, except by an investment that is subject to the claims of the employer's general creditors.	Yes, unless plan is fully insured.	No, but must have annuity contracts or custodial accounts.	No, but must have a custodial account. However, a governmental employer can itself be the custodian.
Are funds protected from creditors of employees?	Probably yes. See Rousey v. Jacoway, __ U.S. ___ (April 4, 2005), holding that an individual retirement account, although not subject to ERISA, was nevertheless exempt from the claims of creditors under 11 U. S. C. §522(d)(10)(E). Similar reasoning should apply to a 457(b) plan.	Probably yes. See Rousey v. Jacoway, __ U.S. ___ (April 4, 2005), holding that an individual retirement account, although not subject to ERISA, was nevertheless exempt from the claims of creditors under 11 U. S. C. §522(d)(10)(E). Similar reasoning should apply to a 401(k) plan.	Probably yes. See Rousey v. Jacoway, __ U.S. ___ (April 4, 2005), holding that an individual retirement account, although not subject to ERISA, was nevertheless exempt from the claims of creditors under 11 U. S. C. §522(d)(10)(E). Similar reasoning should apply to a 403(b) plan.	Probably yes. See Rousey v. Jacoway, __ U.S. ___ (April 4, 2005), holding that an individual retirement account, although not subject to ERISA, was nevertheless exempt from the claims of creditors under 11 U. S. C. §522(d)(10)(E). Similar reasoning should apply to a deemed IRA.
Is there a prohibition on discrimination in favor of highly compensated employees?	No. In fact, a nongovernmental 457(b) plan must be limited to a select group of management or highly compensated employees, in order to prevent the prohibition on funding under section 457(b) from conflicting with the normal ERISA requirement that a plan be funded.	Yes, except in the case of a plan of a state or local government. However, IRS Notice 2003-6 003-3 I.R.B. 298 (January 21, 2003) delayed the application of these rules in the case of a governmental entity other than a state or local government (e.g., a federal government agency or an international organization) until the first day of the first plan year beginning on or after the date final regulations describing the application of these provisions to such plans are issued, and delayed the application of these rules until at least 2005 in the case of a church. These rules include restrictions on the actual level of contributions as well as on the opportunity to contribute. The rules do not apply, however, if no highly compensated employees participate in the plan.	In the case of salary reduction contributions, simplified rules measure only availability of the right to make contributions, not actual contribution levels. In the case of other contributions, state and local governments and nonelecting church plans are not subject to nondiscrimination requirements, but other governmental employers are. For this purpose, a church-controlled organization is not a church. IRS Notice 2003-6 003-3 I.R.B. 298 (January 21, 2003) delayed the application of these rules in the case of a governmental entity other than a state or local government (e.g., an educational institution operated by a federal government agency) ) until the first day of the first plan year beginning on or after the date final regulations describing the application of these provisions to such plans are issued.	Yes, as to availability. However, no testing need be performed on the amounts actually deferred by employees.
Are there salary reduction distribution restrictions?	Yes.	Yes.	Apply to elective deferrals made after December 31, 1988, and to earnings accrued after December 31, 1988 on both pre-1989 and post-1988 deferrals.	There are penalties on early withdrawal, but not prohibitions.
Is there an exception to salary reduction distribution restrictions for hardships?	Only if the hardship represents an "unforeseeable emergency."	Yes.	Yes, but the exception applies only to the salary reduction contributions themselves, not to income on them.	NA
Is there an exception to salary reduction distribution restrictions for plan terminations?	Yes.	Yes.	Yes, at least under proposed regulations. Prop. Treas. Reg 1.403(b)-10 (November 14, 2004).	NA
Do the minimum distribution requirements of section 401(a)(9) apply?	Yes.	Yes.	Yes, for elective deferrals made after December 31, 1988, and to earnings accrued after December 31, 1988 on both pre-1989 and post-1988 deferrals. Pre-1987 account balances are subject to less stringent rules under which distributions need not commence until the later of termination of employment or the date on which the employee attains (or in the case of a deceased employee, would have attained) age 75.	Yes.
Does Title I of ERISA apply?	Governmental Section 457(b) plans are exempt from Title I of ERISA. Nongovernmental plans must limit coverage to a select group of management or highly compensated employees in order to avoid ERISA Title I coverage, which would require funding incompatible with a nongovernmental 457(b) plan.	Yes, except in the case of a governmental or church plan.	No, in the case of a salary-reduction-only plan that meets certain requirements, or a governmental or church plan; yes in other instances.	No.
Do prohibited transaction rules apply?	Cross-reference to Code Section 401(a) in Code Section 457(g) may make Section 503(b) prohibited transaction rules applicable to governmental 457(b) plans. Nongovernmental 457(b) plans are not covered by prohibited transaction rules.	Strict prohibited transaction rules under I.R.C. § 4975 apply to plans other than governmental or nonelecting church plans. Looser prohibited transaction rules under I.R.C. § 503(b) apply to governmental plans. In addition, some states apply prohibited transaction rules to governmental plans.	No, unless imposed by state or local law.	Yes, under Code section 408.
Are IRS determination letters available?	Only possible through National Office private letter ruling; no prototype submissions.	Yes.	Only possible through National Office private letter ruling; no prototype submissions.	No.
Is there IRS audit activity?	IRS is targeting 457(b) plans for audit.	No specific focus on 401(k) plans.	IRS is targeting 403(b) plans for audit.	No specific focus on deemed IRAs.
Are correction programs available?	The IRS will accept submissions relating to governmental 457(b) plans on a provisional basis outside of EPCRS. No corrections program is available for nongovernmental 457(b) plans.	EPCRS.	EPCRS.	No.
What state income tax considerations apply?	A few states have not brought their rules regarding 457(b) plans into conformity with federal law, which may lead to more restrictive rules in those states.	Typically none.	Some states (e.g., New Jersey and Pennsylvania) impose income taxes on all 403(b) contributions.	Typically none.
What practical considerations apply?	457(b) plans are not really understood as a 401(k) equivalent. Fewer entities provide services to 457(b) plans than to 401(k) or 403(b) plans. In many instances, the investment choices readily available are much less favorable. 457(b) plans have become quite attractive as a supplement to 401(k) or 403(b) plans, if an employer wishes to provide for larger tax deferred contributions.	Determination letters available; prototype submissions possible. Overwhelming popularity makes 401(k) plans a recognizable commodity to most individuals. Good software and support materials are available. Better understanding in vendor community	403(b) plans are not really understood as a 401(k) equivalent. Good 403(b) software not as available. Vendor understanding of 403(b) plans more limited.	These plans do not provide a tax advantage over independently owned IRAs. Rather, they are designed to allow an employer to facilitate IRA ownership by employees.

This chart was originally created for the 457 Answer Book.