A 457(b) allows employees to make elective deferrals towards a retirement plan. The employer withholds money from the employees' paycheck to contribute directly into a 457(b) account. The employee does not pay taxes on these contributions until the money with withdrawn, usually after the employee retires.

The limit on elective deferrals for 2021 is $19,500. Employees at the age of 50 or older may contribute up to an additional $6,500 for a total of $26,000. Deferrals may not exceed 100% of your wages.