What is a 457(b) Program?
A 457(b) is a program set up by your employer and allows you to set aside money for retirement on a pre-tax basis through salary reduction. Your premium payments into a 457(b) annuity and any earnings grow tax-deferred until you make a withdrawal, presumably at retirement. If you already have a 403(b) annuity and have paid the maximum amount into it, you may be able to use a 457(b) to increase the amount you are putting aside for retirement.
Benefits of a 457(b) Program
- Premium payments through payroll reductions reduce your current taxable income.
- Higher payment limits than Individual Retirement Annuities (IRAs).
- Income taxes are deferred until withdrawal at retirement.
- Disciplined retirement planning through regular payroll reduction.
Horace Mann Life Insurance Company underwrites Horace Mann annuities. Annuities should be considered long-term investments. If you take your money out early, you could be subject to an additional 10 percent federal income tax. In addition, withdrawals on tax-qualified contracts may be restricted by the IRS or your employer’s plan. You should consult with your tax advisor regarding any tax-favored products. While an annuity is not required in order to obtain tax deferral within a 457(b) or other tax-qualified retirement plan, an annuity offers additional benefits. In order to offer these benefits there are additional charges and fees in the annuity.