Section 457 Plan
Categories: Tax, Regulations, Trusts and Estates
It's an extra benefit to government employees, courtesy of Uncle Sam. Employees under this plan are allowed to defer (not avoid) taxes on income.
Example
Ms. Havisham decides to take the amount she lost on a failed wedding out of her paycheck each year—$10,000—and put that money in a 457 plan. There are no taxes on that $10,000 until she takes it out of that plan, at which point it's taxed normally.
These plans are set up to help government employees better prepare for a quality retirement, i.e. not one in which they are living in the back seat of their old station wagon.