Contributions under an eligible 457(b) plan

As a plan sponsor, staying current on contribution limits is one of the most important steps you can take to help your participants maximize their retirement savings — and to keep your plan operating in compliance. With 2026 limits now in effect, here’s a clear breakdown of how the rules work under 457(b) plans, including catch-up opportunities your participants may be able to take advantage of.

Understanding the basic 457(b) contribution limit

Internal Revenue Code (“Code”) Section 457(b)(2) sets forth the maximum contributions that an individual can contribute and the fully vested contributions that an employer may make to an employee’s account within a calendar year.

Generally, participant contributions — which include pre-tax, Roth after-tax (if a governmental plan), and employer contributions that are 100% vested (or will become vested in that tax year) — cannot exceed the lesser of:

• $24,500 (for 2026, subject to IRS annual cost of living adjustments), or
• 100% of the participant’s includible compensation.

It’s important to note that this annual limit is an individual limit. It must take into account all annual vested contributions allocated to the individual’s account under all 457(b) plans the individual has participated in during the taxable year.

A few important reminders for plan sponsors

• A participant is always vested in employee contributions made to the 457(b) plan. 
• Employer contributions that are not vested (i.e., amounts still subject to a vesting schedule) when contributed do not count toward the 457(b) annual contribution limit in effect in the taxable year of contribution.
• Employee contributions and vested employer contributions — along with applicable earnings on those vested employer contributions — count toward the General 457(b) Annual Contribution Limit in effect in the taxable year that contributions are vested. This requirement can result in excess contributions in the year vested and can be administratively cumbersome.

Permissible catch-up contributions

Beyond the general limit, two catch-up contribution features may be available under a 457(b) plan. However, they cannot both be used in the same tax year — a participant must use the provision that provides the greater catch-up contribution amount. In order to utilize either catch-up feature, the option must be elected in the 457(b) plan document.

The two available catch-up provisions are:

1. The Special 457(b) Catch-up, or
2. The Age-based Catch-up.

Note: The Age-based Catch-up is not available to individuals participating in 457(b) plans sponsored by non-governmental tax-exempt organizations.

1. Special 457(b) Catch-up contributions

The Special 457(b) Catch-up is designed to help participants who didn’t maximize their contributions in earlier years make up for lost ground. A participant who is within the three calendar years prior to the year they attain Normal Retirement Age — as defined in the plan document — may increase their annual deferral contributions to make up for prior years in which they did not contribute the maximum permissible amounts.

Special 457(b) Catch-up contributions cannot exceed the lesser of:

• Twice the dollar amount in effect for the year (in 2026: $24,500 × 2 = $49,000), or
• The participant’s annual limit for the taxable year established under Code Section 457(b)(2) — i.e., the lesser of $24,500 for 2026 or 100% of includible compensation — plus the total of underutilized contributions from prior years.

Key administrative considerations

• An eligible participant seeking to contribute under the Special 457(b) Catch-up must make a written election to contribute under this catch-up, including documenting the Normal Retirement Age to be used for purposes of this catch-up.
• Determining underutilized contribution amounts in prior years requires a year-by-year analysis.
• For more information, including a catch-up worksheet, ask for the Voya brochure “How much can I contribute? Contribution limits for eligible 457(b) Deferred Compensation Plans.”

2. Age-based Catch-up contributions

In addition to the Special 457(b) Catch-up, a governmental 457(b) plan may provide that certain employees can make additional catch-up contributions based on their attained age at the end of the calendar year. Here’s how the age tiers break down:

Age 50–59 and 64+ Catch-up

A governmental 457(b) plan participant who attains age 50–59 or age 64+ by the end of the year may contribute an additional $8,000 (in 2026, subject to IRS annual cost of living adjustments), provided that 457(b) contributions to the participant’s 457(b) account will exceed at least one of the following limits in that calendar year:

• The General 457(b) Annual Contribution Limit, or
•  A lower employer-provided limit under the plan (if any).

Increased Catch-up for participants age 60–63

A governmental 457(b) plan may permit an optional increase in the Age-based Catch-up amount for participants who attain age 60–63 by the end of the year — in the amount of $11,250.

Mandatory Roth contributions: A SECURE 2.0 update

The SECURE 2.0 Act of 2022 added further stipulations on the Age-based Catch-up provisions. If a participant’s FICA wages (in Box 3 of Form W-2), if applicable, in the previous year paid by the employer sponsoring the plan were more than $150,000 (subject to IRS annual cost of living adjustments), the participant must make Age-based Catch-up contributions only on a Roth basis.

An important reminder: An individual participating in a governmental 457(b) plan who is eligible for both the Special 457(b) Catch-up and an Age-based Catch-up cannot use both catch-ups in the same calendar tax year. Rather, the individual would be required to use the catch-up provision that permits the greater contribution amount.

Questions? We’re Here to Help.

Navigating contribution limits, catch-up elections and vesting rules can be complex — but you don’t have to do it alone. Voya is committed to providing plan sponsors with the tools, resources and expertise to administer their plans with confidence. For more information, contact your Voya representative.

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