State and local government employees can invest more in their 457 plans in 2025 than in 2024. Like the better-known 401(k) plan in the private sector, the 457 plan (sometimes called a "457(b) plan") allows employees to deposit a portion of their pre-tax earnings in an investment account.
The 457 is also a tax-advantaged account; employees postpone paying taxes on the money invested in the 457 until the funds are withdrawn after they retire. As such, these plans can help government workers with their retirement planning.
