Your pension is the base of your retirement. A 403(b) or 457(b) lets you build more on top of it. Both are savings plans offered by schools, states, cities and other public employers. You put money in from your paycheck, often before taxes, and it grows until you retire.
Here are the 2026 limits, what the new catch-up rules mean, and how to choose between the two plans.
The 2026 limits
| Your age at the end of 2026 | 403(b) | 457(b) |
|---|---|---|
| Under 50 | $24,500 | $24,500 |
| 50 to 59, or 64 and older | $32,500 | $32,500 |
| 60 to 63 | $35,750 | $35,750 |
The regular limit is $24,500. If you are 50 or older, you can add a “catch-up” of $8,000. If you are 60, 61, 62 or 63, the catch-up is bigger: $11,250. That higher catch-up is new in the last two years and was made for people in the final stretch before retirement.
You can use both plans
This is the part many public workers do not know. The 403(b) and 457(b) have separate limits. If your employer offers both, you can put the full amount in each.
| Your age | Most you can save in 2026 using both |
|---|---|
| Under 50 | $49,000 |
| 50 to 59 | $65,000 |
| 60 to 63 | $71,500 |
Few people can save that much. But if you are close to retirement and your kids are grown, using both plans can make a big difference in a few years.
Two special catch-ups
457(b) final three years. In the three years before your plan’s normal retirement age, you may be able to save up to double the normal limit, as long as you did not save the full amount in earlier years. You use this instead of the age-50 catch-up, not on top of it.
403(b) 15-year rule. If you have worked 15 years or more for the same school district or public employer, you may be able to save up to $3,000 more a year, up to $15,000 over your career.
Not every plan offers these. Ask your plan’s office.
A new rule for higher earners
Starting in 2026, people who earned more than a set amount the year before must put their catch-up money into a Roth account. With a Roth, you pay tax on the money now, and it comes out tax-free later. Your regular contributions are not affected. If you are a principal, administrator or earn a high salary, check which rule applies to you.
403(b) or 457(b): which comes first?
Both plans work in a similar way, but there are differences.
| 403(b) | 457(b) | |
|---|---|---|
| Who offers it | Schools, universities, hospitals, nonprofits | State and local governments, many school districts |
| Early withdrawal penalty | 10% before 59½, with some exceptions | No 10% penalty once you leave the job |
| Special catch-up | 15-year rule | Final three years rule |
| Common problem | Some plans sell high-fee annuities | Fewer choices in some plans |
For people who may retire before 59½, the 457(b) has a big advantage. Once you leave your job, you can take money out at any age without the extra 10% penalty. You still pay income tax.
For many public workers, a good order is: put money in the plan with the lowest fees first, then add the other one.
Watch out for fees
Some 403(b) plans, especially at schools, offer annuity products with high fees. A fee of 1.5% a year might not sound like much, but over 20 years it can eat a large part of your growth. Look for low-cost index funds in your plan. Your plan has to tell you what each option charges.
How much can a little add up to?
Say you save $500 a month starting at age 45, and your money grows 6% a year. By 60 you would have about $145,000. If you add $500 to both plans, about $290,000. Spread over 25 years of retirement, that could add several hundred dollars a month to your pension.
You can see how savings fit with your pension and Social Security in My retirement plan.
What about 2027?
The IRS usually announces next year’s limits in the fall. We will add the 2027 numbers here as soon as they are out.
Questions people ask
Can I have a 403(b) and an IRA too? Yes. An IRA has its own limit, $7,500 in 2026, plus $1,100 more if you are 50 or older.
Does my pension contribution count toward these limits? No. Your required pension contribution is separate.
What if I leave my job? The money is yours. You can leave it in the plan, roll it into an IRA, or roll it into a new employer’s plan.
Compare the two plans in more depth in our 403(b) vs 457(b) guide.