State and local government employees can invest more in their 457 plans in 2026 than in 2025. Similar to 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 plan is also a tax-advantaged account. That means employees postpone paying taxes on the money invested in the 457 until the funds are withdrawn after they retire. This makes a 457 plan a vital part of retirement planning for government employees..
