Wealth Building · 12 min read
The 457(b): The Second $24,500
A doubled deferral space most academic physicians never open — and the one word that decides whether you should
Reviewed by Jonathan Shafer, DO, July 2026. Disclosure: the reviewer is the founder and owner of Attending Financial LLC. This is education, not individualized financial advice.
The doubled space most academic physicians never open
You already know the first bucket: defer $24,500 into your or in 2026, capture the , move on. What many academic and hospital-employed physicians never notice is a second line in the benefits portal — a 457(b) plan with its own separate $24,500 limit under IRC Section 457(e)(15). That is not a typo. The 457(b) limit does not aggregate with the 402(g) limit that governs 401(k) and 403(b) deferrals, so an eligible physician can defer $49,000 of salary in 2026 before any catch-up provision. At a 35 percent , the second $24,500 defers $8,575 of federal tax every year, and twenty years of that space compounds to roughly $901,000 at a 6 percent assumed return. Yet the 457(b) is not a simple doubling of your 403(b). One version is held in trust for you; the other makes you an unsecured creditor of your employer. This module teaches you to tell them apart before you contribute a dollar.
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- Governmental or non-governmental: one word decides your risk
- The exit is where non-governmental plans hurt you
- Twenty years of the second $24,500, worked out
- Check yourself: where can non-governmental money go?
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