Updated August 3, 2026. Quick answer: if your employer offers both, the question is usually not which — it is that you can do both, in full. The two limits are separate by statute, so in 2026 a dual-plan worker can defer $24,500 to the 403(b) and another $24,500 to the 457(b). If you must choose one, the 457(b) usually wins on flexibility, and the 403(b) wins if it is where the employer match lives.
Why the limits really are separate
The 402(g) limit applies to “elective deferrals”, and 402(g)(3) defines that term as a closed list of four: 401(k) arrangements, the 402(h)(1)(B) SARSEP contribution, 403(b) salary-reduction contributions, and 501(c)(18) contributions. A 457(b) deferral is not among them. The 457(b) has its own separate ceiling in 457(b)(2) — the lesser of the applicable dollar amount or 100% of includible compensation.
Two closed lists, one number in each. For 2026 that is $24,500 each, so $49,000 of deferral capacity for someone with both plans, before any catch-up. Very few private-sector workers have anything comparable.
If you can only fund one
- Fund the 403(b) first if it carries the match. An employer match is an immediate return nothing else on this page competes with.
- Otherwise the 457(b), on flexibility. It has no 10% early-withdrawal penalty at any age after separation — the mechanism, from the statute — while the 403(b) sits squarely inside 4974(c) and is penalty-exposed before 59½.
- Weigh the investment menu. In K-12 especially, the 403(b) menu is often annuity-heavy while the 457(b) menu is not, or the reverse. Compare the actual funds and their costs, not the plan labels.
Getting the money out later
The order most public-sector workers should use
Match first, wherever it is. Then the 457(b), for the flexibility. Then the 403(b). Then, if there is still capacity, catch-ups — and read the rules on those carefully, because the 457(b) catch-ups do not stack the way people assume.
2026 figures: elective deferral limit $24,500 per plan, age-50 catch-up $8,000, and $11,250 for ages 60 to 63 (IRS Notice 2025-67).
Related: how a 403(b) differs from a 401(k) · why catch-up sits outside the 415(c) limit.
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Penalty and limit statements on this page are read from the Internal Revenue Code itself (26 U.S.C. 72, 402, 414, 457 and 4974) and from IRS Notice 2025-67 for the 2026 figures. General information, not tax advice; your plan document can be more restrictive than the Code, and it governs what your plan actually allows.