Retirement account types

Quick reference for the major retirement account types available to FRS Special Risk members, including the public safety officer penalty exemption.

Governmental 457(b)

Tax treatment: Pre-tax contributions reduce current taxable income. Withdrawals are taxed as ordinary income.
2026 contribution limits: $24,500 standard. Age 50+ catch-up: $32,500. Final-3-years special catch-up: up to $49,000.
Early withdrawal: No 10% IRS early-withdrawal penalty after separation from service at any age. This is the key advantage over 401(k)/403(b) plans for early retirees.

Governmental 457(b) plans permit penalty-free withdrawals after separation from service at any age (IRC §72(t)(9)) — no Public Safety Officer (PSO) exemption needed for 457(b) access.
A "final three years" special catch-up allows contributions of up to 2× the standard limit during the three years prior to normal retirement.
Roth 457(b) options exist at some employers — contributions are after-tax but qualified withdrawals (including growth) are tax-free.
Required minimum distributions (RMDs) begin at age 73 (age 75 for those born in 1960 or later, per SECURE 2.0). Rolling 457(b) funds into a Roth IRA eliminates RMD requirements during the owner's lifetime — a consideration for members retiring in their late 40s or early 50s who have 20+ years before RMDs apply.

Tax treatment: Pre-tax Traditional 403(b) contributions reduce current taxable income; withdrawals are taxed as ordinary income. Roth 403(b) contributions (when the employer offers the option) are after-tax with tax-free qualified withdrawals — same tax treatment as Roth 457(b).
2026 contribution limits: $24,500 standard — the §402(g) elective deferral limit, shared with 401(k) and SARSEP plans but NOT with governmental 457(b). Age 50+ catch-up: $32,500. A separate 15-years-of-service special catch-up exists under IRC §402(g)(7); the formula and ceiling are plan-specific.
Early withdrawal: 10% IRS early-withdrawal penalty applies to distributions before age 59½. Unlike governmental 457(b), there is no separation-from-service exception under IRC §72(t)(9) — early retirees who separate in their 50s will incur the penalty on any direct 403(b) distribution unless another exception applies.

403(b) plans are offered by public schools, universities, hospitals, and certain 501(c)(3) organizations. Teachers and university staff (Regular Class) commonly have 403(b) available instead of — or in addition to — 457(b).
A member covered by both a 403(b) and a governmental 457(b) may elect the full elective deferral limit in each plan — the §402(g) limit applies per-plan-type, so dual participation effectively permits $49,000/year in 2026 (before catch-ups).
The Public Safety Officer penalty exemption (IRC §72(t)(10)) can apply to 403(b) rollovers for Special Risk members who separate at age 50 or older — the same mechanic that applies to Traditional IRAs funded from a pension or DROP rollover.
Required minimum distributions (RMDs) begin at age 73 (age 75 for those born in 1960 or later, per SECURE 2.0) — same schedule as 457(b) and Traditional IRA.

Tax treatment: Contributions are after-tax. Qualified withdrawals (including growth) are tax-free.
2026 contribution limits: $7,500 standard. Age 50+ catch-up: $8,600.
Early withdrawal: Contributions can be withdrawn at any time tax- and penalty-free. Earnings withdrawn before age 59½ may be subject to the 10% penalty unless a qualifying exception applies.

Contribution eligibility phases out at higher modified adjusted gross income (MAGI) levels.
Tax-free growth makes Roth IRAs particularly valuable for long horizons and for hedging against future tax-rate increases.
Roth IRAs have no required minimum distributions during the original owner's lifetime.

Tax treatment: Contributions may be deductible depending on income and workplace plan coverage. Withdrawals are taxed as ordinary income.
2026 contribution limits: $7,500 standard. Age 50+ catch-up: $8,600.
Early withdrawal: 10% IRS early-withdrawal penalty applies to distributions before age 59½ unless a qualifying exception applies (substantially equal periodic payments, first home, qualified higher education, etc.).

Required minimum distributions begin at age 73 (rising to 75 for younger cohorts under SECURE 2.0).
Deductibility of contributions phases out at higher income if you are also covered by a workplace plan.
Public Safety Officers who separate from service at age 50 or older may use the PSO penalty exemption (IRC §72(t)(10)) to take distributions from a traditional IRA funded by a pension or DROP rollover without the 10% early-withdrawal penalty. This applies to rollovers from qualified plans — not to regular IRA contributions.