457(b) Retirement Plan for Physicians: 2025 Guide

Think you’ve got retirement figured out with your 403(b)? Think again. The 457(b) retirement plan is the secret weapon many hospital-employed doctors never use—but should. No early withdrawal penalty, separate contribution limits, and a double-catch-up in your final years? That’s game-changing. Let’s break it down.

Watch: 457(b) Retirement Plan for Physicians: 2025 Guide Explained

📌 Jump to Section

• Quick Retirement Plan Overview
• Why 457(b) Is a Hidden Gem
• Government vs Non-Government 457(b)
• Pre-Tax vs Roth Contributions
• 2025 Contribution Limits & Catch-Ups
• Early Withdrawals: No Penalty
• Required Minimum Distributions
• 457(b) Stands Alone (Stack with 403(b)!)
• Rollover Flexibility
• FAQ

Quick Retirement Plan Overview

Here’s the lineup you already know:

• 401(k) – Corporate world, pre-tax or Roth
• 403(b) – Nonprofits, hospitals, schools
• Roth IRA – After-tax, tax-free growth
• HSA – Triple tax-free medical savings

Now meet the deferred compensation plan most doctors ignore: the 457(b).

Why 457(b) Is a Hidden Gem

Here’s the catch—you don’t have to choose between your 403(b) and a 457(b). You can max both. That’s an extra $23,500 (or more) in tax-advantaged savings every year.

Real doctor example: Dr. Patel, a 52-year-old cardiologist at a nonprofit hospital, already maxed her 403(b). Adding the 457(b) let her shelter another $31,000 (with catch-up) in 2025—dropping her taxable income by over $50K. She’s now on track to retire at 60 with zero early withdrawal penalties.

Government vs Non-Government 457(b)

Feature	Government 457(b)	Non-Government 457(b)
Early withdrawal <59½	No 10% penalty 👍	10% penalty 👎
Rollover to IRA/401(k)	Full flexibility 👍	Often restricted 👎
Creditor protection	ERISA-level 👍	Employer owns assets 👎

Bottom line: Pick the government plan every time, if you have both options. 

Pre-Tax vs Roth Contributions

• Pre-tax: Cut your taxes now. Best if you’re in the 32%+ bracket today.
• Roth 457(b): Pay tax now, withdraw tax-free later. Smart for residents or future high earners.

Can’t decide? Split it 50/50 for tax diversification.

2025 Contribution Limits & Special Catch-Ups

• Base limit: $23,500
• Age 50+ catch-up: +$7,500
• Pre-retirement double catch-up (3 years before normal retirement age): Up to $47,000

That last one? Pure gold for late-starting attendings.

Early Withdrawals: No 10% Penalty

Unlike 401(k)s or 403(b)s, government 457(b) plans let you withdraw any time after leaving your job—no age 59½, no penalty. Ideal for early retirement or bridge strategies.

Required Minimum Distributions (RMDs)

Kick in at 73 (or 75 if born 1960+). Pro move: Convert chunks to Roth in early retirement to shrink future tax bombs.

457(b) Stands Alone—Stack with Your 403(b)!

Its limit is independent. That means:

• Max 403(b): $23,500
• Max 457(b): $23,500
• Total: $47,000+ in tax-advantaged savings

With catch-ups? $62,000. With double catch-up? Nearly $100K.

Rollover Flexibility

Government 457(b): Roll to IRA, 403(b), or new 457(b). Non-government? Often locked in. If fees are low, just leave it.

Frequently Asked Questions

More for Physicians:

• Roth IRA Strategies for Physicians
• Tax-Efficient Taxable Accounts for Doctors
• Top 6 Money Mistakes Doctors Make

Trusted Resources:

• Investopedia: 457(b) Plans
• NerdWallet: 457(b) vs 403(b)
• Bankrate: Early Withdrawal Rules

Disclosures