Contribution limits depend on if you are making contributions as a government employee, a non-profit employee, or a highly compensated employee. Government employees can defer up to $18,000, plus a $6,000 catch-up contribution for those over 50, in 2016.
These plans use the same elective deferral limits as 401(k)s. A non-governmental, non-profit employee can only contribute the $18,000, and is not allowed to make the $6,000 catch-up. Both of these types of employees are allowed to use the alternate catch-up provision of 457s, however.
These contributions can be made if the employee is less than three years from normal retirement age, which is defined by the IRS, and is 67 years old for most people in 2016. These catch-up contributions can be for the same amount as the 457 deferral limit, so in 2016 an employee could defer $36,000 a year pretax if their situation fit the guidelines.
There are more details to those, so check with your plan sponsor or CPA for specifics. If you are part of the upper management of a company, whether non-profit or for-profit, you may be able to defer compensation into a Top-Hat arrangement. These are not subject to ERISA, and have no defined limits on contributions.
But, since the Enron collapse, these have come under more scrutiny, since many executives used such plans. These plans are considered “unfunded,” and remain on the books of the company, and subject to the company’s creditors.
They are normally paid out as a salary continuation plan, which was arranged informally with a board resolution, and are taxable to the employee as income when received. These distributions can also be taken before age 59 ½ without incurring an IRS penalty.
All 457 plan contributions are separate from contribution limits to other plans, so a person could defer up to the limit on a 457 and a 401(k) or 403(b). There are also 457(f) plans, used as bonuses for highly compensated employees at tax-exempt universities and so forth, which do not have deferral limits, but are subject to Rule 409A.