If you work for a school system, you probably have a pension, and you may also have been offered one or both of two savings plans with awkward names: a 403(b) and a 457(b). They are named after sections of the tax code, which explains why the names say nothing useful about what they do.

Both are workplace savings accounts. You choose an amount to come out of your pay, it goes into the account before income tax in the traditional version, and it is taxed later when you take it out. Some employers also offer a Roth version of either plan, where the money is taxed now and qualified withdrawals later are not.

They sit alongside a pension rather than replacing it. A pension is a promise of income calculated from your service and salary. These accounts hold a balance that depends on what went in and what happened to it afterwards.

The differences that actually matter

They have separate contribution limits. This is the one most people are surprised by. A 403(b) and a governmental 457(b) do not share a limit. Someone with access to both can contribute up to the limit in each, in the same year. For 2026 the elective deferral limit is $24,500 per plan.

Withdrawal rules differ, and the difference is significant. Money taken from a 403(b) before age 59½ is generally subject to a 10% early withdrawal penalty on top of ordinary income tax, apart from specific exceptions. A governmental 457(b) does not carry that 10% penalty once you have separated from service, whatever your age. Income tax still applies. For anyone who might stop working before 59½, that distinction is worth understanding early rather than discovering afterwards.

One caution attached to it: rolling a governmental 457(b) into another kind of plan can permanently forfeit that penalty exemption for the money moved. That is a question to ask before a rollover, not after.

Catch-up provisions are not identical. From age 50, plans that permit it allow an additional amount, $8,000 in 2026. A higher figure of $11,250 applies in 2026 to people who reach ages 60 to 63 in the year, where the plan offers it. The 403(b) also has a separate long-service provision for employees with at least 15 years with the same qualifying employer, which can add up to $3,000 a year within lifetime caps. That one is easy to miss because it is optional for the employer to offer and depends on your own service history.

Non-governmental 457(b) plans are a different animal. Most school employees are in a governmental 457(b). Plans offered by tax-exempt employers that are not governmental carry materially different rules, including how the money is treated if the employer runs into financial trouble. If you are not certain which kind you have, that is a reasonable question to put to your benefits office.

The features worth checking in your own plans

These are the questions that change outcomes, and all of them are answerable from documents you can already obtain.

  • What am I paying? Costs vary widely between plans and between the investment options inside them. In school 403(b) programs in particular, an employee may face a long list of providers with very different charges. The plan or provider will supply the figures.
  • What is the employer contributing, if anything? Some school employers contribute to one of these plans and not the other. Contributing to the one that gets no employer money while leaving the other untouched is a common and avoidable mistake.
  • Which providers is my employer's plan offering? The list is set by the employer, and the options on it are not all the same.
  • Is a Roth version available? Whether that is useful depends on circumstances the plan document cannot know, but you need to know whether the door exists.
  • What are the rules for taking money out while still employed? They are narrower than most people expect in both plan types.
  • If I have accounts from a previous employer, where are they and what do they cost? Old accounts from earlier posts are frequently forgotten, and the charges continue.

A note on the tax treatment

Both plans defer income tax rather than removing it. Money goes in before tax in the traditional version, grows without annual tax, and is taxed as income when withdrawn. Required minimum distributions eventually apply. This is a shift in timing, and whether that timing suits any particular person depends on their circumstances now and later, which no article can know.

Where the figures come from

Contribution and catch-up limits are set federally and adjusted for inflation, so any figure has a year attached. The numbers above are 2026 figures. Whether your plan offers a particular provision is a separate question from whether federal rules permit it: employers choose which optional features to include, so your plan document is the authority on your own plan.

This article is general educational information about how these two categories of workplace savings plan are structured. It is not advice, and nothing in it recommends that any individual contribute to either plan, choose between them, or select any investment. Plan features vary by employer, and federal limits change annually. Your plan documents and your benefits office are the authoritative source for your own plans. Nothing on this website is a recommendation, and no product is recommended before we understand your situation.