2026 457(b) limit
$24,500
Catch-up, age 50+
$8,000
Combined with a 401(k)
$49,000
What the maximum contribution saves
A single New York City resident contributing the full 2026 limit as a pre-tax deferral:
| Salary | Deferral | Income tax saved | Real cost in take-home | Share of salary |
|---|---|---|---|---|
| $75,000 | $24,500 | $6,058 | $18,442 | 24.6% |
| $100,000 | $24,500 | $7,719 | $16,781 | 16.8% |
| $150,000 | $24,500 | $8,275 | $16,225 | 10.8% |
| $250,000 | $24,500 | $10,468 | $14,032 | 5.6% |
Single filer, five boroughs, standard deductions. FICA is unaffected by a pre-tax deferral, so it is not part of the saving.
Why the two-plan stack matters
Because a governmental 457(b) has its own limit, a city employee who also has access to a 401(k) or 403(b) can defer $24,500 into each, which is a materially larger tax reduction than either plan alone. That stacking is the single most underused feature of the plan.
The early-withdrawal difference is worth understanding even if you never use it. A 457(b) is not subject to the 10% additional tax on early distributions after separation from service, which makes it the more flexible of the two for anyone considering leaving city employment before 59 and a half.
Model it yourself
Enter your deferral per paycheck in the NYC paycheck calculator to see the effect on net pay, or read the 401(k) guide for the parallel limits. Teachers should start with the DOE salary guide.
Deferred comp questions
What is the NYC Deferred Compensation Plan?+−
It is a voluntary retirement savings plan for New York City employees, administered under section 457(b) of the Internal Revenue Code. Because a 457(b) sponsored by a government employer is a separate limit from a 401(k) or 403(b), an employee with access to both can generally contribute the maximum to each.
What is the 2026 457(b) contribution limit?+−
The 2026 employee contribution limit for 401(k), 403(b) and governmental 457(b) plans is $24,500. Employees aged 50 or over can add $8,000 as a catch-up contribution, and those aged 60 to 63 have a higher catch-up of $11,250.
How is a 457(b) different from a 401(k)?+−
Two differences matter for a New York City employee. First, 457(b) money is not subject to the 10% early distribution penalty on separation from service, so it can be drawn before age 59 and a half without that particular penalty. Second, the limit is separate, so the two plans can be used together rather than competing for one ceiling.
Does a 457(b) contribution reduce New York City tax?+−
Yes. The contribution reduces New York taxable income, and the New York City resident tax is calculated on that same figure, so a pre-tax deferral reduces federal, New York State and New York City income tax together. Social Security and Medicare still apply to the deferred amount.
Roth or traditional inside the plan?+−
Many 457(b) plans offer both. A traditional deferral reduces taxable income now, which is worth more in New York City because three income tax layers are reduced at once. A Roth deferral saves nothing today but is not taxed on withdrawal, which pairs well with a later move out of the city or the state.