Dollar figures in this piece are for tax year 2026.
For 2026 a physician can defer $24,500 into a 403(b) or 401(k) and a separate $24,500 into a 457(b). The 457(b) has its own limit and does not share the 403(b) cap. That is $49,000 of employee deferrals before catch-up amounts. Whether you can use both depends on what your employer offers, and the kind of 457(b) matters as much as the dollar limit.
Below: the 2026 limits, the split between governmental and non-governmental 457(b) plans, the Roth catch-up rule that reaches high earners, and a computed example. Federal income tax only. For the IRA piece, see the backdoor Roth and the pro-rata rule. For the wider picture, see the medical professionals page or tax planning.
Three buckets, three sets of limits
A hospital-employed physician is usually offered some mix of a 403(b) (or a 401(k) at a for-profit group), a 457(b), and employer contributions on top. The Code treats each differently, so keep them apart.
Elective deferrals to a 403(b), a 401(k) or a SIMPLE IRA are added together under the section 402(g) limit, which is $24,500 for 2026. A 457(b) is not on that list. Its ceiling comes from section 457(b)(2): the lesser of the applicable dollar amount or 100 percent of includible compensation. The 2026 dollar figure is also $24,500. Result: two parallel lanes of $24,500 each.
Employer money is a third lane with a different ceiling. Section 415(c) caps total annual additions to your account at $72,000 for 2026, or 100 percent of compensation if less. Your deferrals count against it along with any match or employer contribution. A physician who defers the maximum has $47,500 of room left for the employer.
2026 limits at a glance
| Account | Employee limit | Age 50+ catch-up | Age 60 to 63 catch-up | Notes |
|---|---|---|---|---|
| 403(b) or 401(k) | $24,500 | $8,000 | $11,250 | Section 402(g) limit, shared across all your employers |
| 403(b), 15-year rule | $27,500 | Plan-dependent | Plan-dependent | Hospital employees with 15 years of service may add up to $3,000, if the plan allows |
| Governmental 457(b) | $24,500 | $8,000 | $11,250 | Separate lane; own catch-up |
| Non-governmental 457(b) | $24,500 | None | None | Employer-owned assets; last-3-years rule only |
| Annual additions (415(c)) | $72,000 | Catch-up excluded | Catch-up excluded | Employee plus employer money in one 403(b) or 401(k) |
| IRA (traditional or Roth) | $7,500 | $8,600 at 50+ | $8,600 | Roth direct limit phases out at $242,000 to $252,000 MAGI, joint |
- 403(b) or 401(k)
- Governmental 457(b)
| 403(b) or 401(k) | Governmental 457(b) | |
|---|---|---|
| Under 50 | $24,500 | $24,500 |
| Age 50 to 59 | $32,500 | $32,500 |
| Age 60 to 63 | $35,750 | $35,750 |
A physician with both a 403(b) and a governmental 457(b) at the same employer can double the catch-up as well as the base limit.
Computed from the 2026 limits in IRS Pub. 560 and Pub. 571
Governmental or non-governmental: the difference that matters
Section 457 covers two kinds of employer. One is a state or local government and its agencies, such as a county hospital or a state university health system. The other is a tax-exempt organization that is not a governmental unit, which takes in most private nonprofit hospitals. Both can sponsor an eligible 457(b) plan, and the dollar limits are the same. The other rules are not.
In a governmental plan, assets must be held in trust for the exclusive benefit of participants. In a non-governmental plan, the deferred amounts, and the property and rights bought with them, stay the employer's property until paid, subject only to the claims of the employer's general creditors. If the hospital fails, a non-governmental 457(b) balance ranks with other unsecured claims. You can size that risk, which is a reason to read the plan document and the hospital's finances before putting in the maximum.
The age 50 catch-up is limited to the governmental kind, because the statute lists a 457 plan only of a governmental employer among the plans eligible for catch-up contributions. The rollover rules in section 457(e)(16) are also written for governmental plans, so ask what happens to a non-governmental balance when you leave.
Governmental and non-governmental 457(b) compared
Governmental
- EmployerState, local government, agency
- Where the money sitsIn trust for participants
- Taxed whenWhen paid to you
- Age 50 catch-upYes, if the plan allows
- Last-3-years catch-up (up to $49,000)Yes, if the plan allows
- Rollover rules in 457(e)(16)Written for these plans
Non-governmental
- EmployerTax-exempt organization that is not a governmental unit
- Where the money sitsEmployer's property, subject to general creditors
- Taxed whenWhen paid or otherwise made available to you
- Age 50 catch-upNo
- Last-3-years catch-up (up to $49,000)Yes, if the plan allows
- Rollover rules in 457(e)(16)Not covered; ask the plan
Under 26 U.S.C. 457 and 414(v). Your plan document controls the details.
See it as a table
| Feature | Governmental | Non-governmental |
|---|---|---|
| Employer | State, local government, agency | Tax-exempt organization that is not a governmental unit |
| Where the money sits | In trust for participants | Employer's property, subject to general creditors |
| Taxed when | When paid to you | When paid or otherwise made available to you |
| Age 50 catch-up | Yes, if the plan allows | No |
| Last-3-years catch-up (up to $49,000) | Yes, if the plan allows | Yes, if the plan allows |
| Rollover rules in 457(e)(16) | Written for these plans | Not covered; ask the plan |
The plan documents say it that way. Here is what it means.
| What you read | What it means |
|---|---|
| The $24,500 cap on 403(b), 401(k) and SIMPLE IRA deferrals added together, for 2026 | |
| Everything going into one 403(b) or 401(k) account in a year: your deferrals plus employer money, up to $72,000 for 2026 | |
| A deferral plan at a state or local government employer, with the assets held in trust for participants | |
| A deferral plan at a tax-exempt employer that is not a government, where the assets stay the employer's property, subject to its general creditors | |
| Extra deferral allowed at age 50 or older: $8,000 for 2026, or $11,250 at ages 60 to 63 | |
| Pay subject to social security and Medicare tax. Partnership self-employment income does not count |
Employer contributions and several employers
Two limits behave differently when you have more than one employer. The section 402(g) limit follows you. It applies to an individual's elective deferrals, so a 403(b) deferral at the hospital and a 401(k) deferral at a moonlighting group share one $24,500. The annual additions limit does not follow you the same way. Pub. 571 says 403(b) accounts maintained by different employers do not have to be combined, while accounts under one employer must be.
Excess pre-tax deferrals are included in your gross income for the year. You can allocate the excess among your plans by March 1 of the following year, and each plan may distribute the allocated amount plus earnings by April 15. A distribution made that way is not included in gross income, although the earnings are taxed in the year they are paid out. A 457(b) does not add to the problem, because it sits outside the 402(g) list. Locum and moonlighting work is where the overlap shows up, so total your deferrals across every W-2 before year end.
Worked example
Example, hypothetical, tax year 2026: a single physician, age 45, with $380,000 of salary at a state university hospital that offers a 403(b) and a governmental 457(b). The hospital adds $10,000 to the 403(b). The physician takes the $16,100 standard deduction. The numbers are federal income tax only, using the 2026 single brackets in Rev. Proc. 2025-32.
With no deferrals, taxable income is $363,900 and the tax is $96,134. Deferring $24,500 to the 403(b) cuts taxable income to $339,400 and the tax to $87,559, a saving of $8,575. Adding $24,500 to the 457(b) cuts taxable income to $314,900 and the tax to $78,984, another $8,575. Every dollar sits in the 35% bracket, which runs from $256,225 to $640,600 for single filers, so each deferral saves 35% of its size.
The 403(b) account receives $34,500 for the year ($24,500 deferred plus $10,000 from the hospital), well under the $72,000 annual additions limit. The 457(b) deferral counts against neither that limit nor the 402(g) cap. That is why both lanes fill at once.
The inputs, so you can redo it
| Scenario | Deferred | Taxable income | Federal tax | Saved vs none |
|---|---|---|---|---|
| No deferrals | $0 | $363,900 | $96,134 | $0 |
| 403(b) only | $24,500 | $339,400 | $87,559 | $8,575 |
| 403(b) plus 457(b) | $49,000 | $314,900 | $78,984 | $17,150 |
Filling the second lane cuts the bill by another $8,575 in this example. Payroll taxes and state tax are not included.
Catch-up contributions and the Roth requirement
At age 50 the 403(b), 401(k) and governmental 457(b) can allow extra deferrals: $8,000 for 2026, or $11,250 if you reach age 60, 61, 62 or 63 during the year. Under section 414(v), the 403(b) and 401(k) count as one plan for this purpose and governmental 457 plans as another, which is why the chart shows a catch-up in each lane. The 457(b) last-3-years rule is a different mechanism. In one of the three years before normal retirement age, the ceiling can reach twice the basic limit, $49,000, if the plan allows. A participant using that higher 457 limit does not also get the age 50 catch-up in that plan.
Section 414(v)(7) adds a Roth condition. If your wages from the plan's employer, as defined for FICA, were over a threshold in the prior year, your catch-up deferrals must be designated Roth. The statute sets the threshold at $145,000, indexed. The final regulation puts it at $155,000 for 2026 wages, which governs catch-ups made in 2027. A salaried physician earning more than that is over it. The regulation applies to taxable years beginning after December 31, 2026, with a reasonable good-faith standard before that, and governmental plans get additional time. What your plan does in 2026 depends on the plan.
Only wages count. A regulation example shows a partner whose pay was mostly a distributive share of partnership income, all of it self-employment income. Only the portion that was FICA wages counted toward the test. A practice owner or partner should ask how the plan treats wages before assuming the rule does or does not apply.
Common mistakes
- Treating the 457(b) as part of the 403(b) limit and stopping at $24,500, which leaves a second lane unused.
- Deferring the maximum to a non-governmental 457(b) without reading how the employer's creditors rank against participants.
- Adding a moonlighting 401(k) deferral and a hospital 403(b) deferral without totaling them against one 402(g) limit.
- Planning a pre-tax catch-up when prior-year FICA wages are over the threshold. That catch-up has to be Roth.
- Assuming the age 50 catch-up applies to a non-governmental 457(b). The statute limits it to governmental employers.
- Waiting until December to change a 457(b) election. A governmental plan needs the agreement in place before the compensation is available, and a non-governmental plan needs it before the month begins.
The usual way versus doing it right
Stop at the 403(b)
- Stop deferring at $24,500 and leave the 457(b) lane unused
- Treat every 457(b) as if it were a 403(b)
- Wait until December to change an election
Fill both lanes with eyes open
- Use the separate 457(b) limit of $24,500 for 2026
- Find out whether the 457(b) is governmental or non-governmental
- Set the election before the pay is available, then divide the room left by the paychecks left
What to do before the year ends
Pull your year-to-date totals
Add 403(b), 401(k) and 457(b) deferrals from the latest pay stubs, across every employer, and compare them to the limits in this article.
Work out the per-paycheck number
Subtract year-to-date deferrals from the limit and divide by the pay periods left. A 457(b) election has to be in place before the pay is available, so a change only reaches future paychecks.
Identify your 457(b) type
Ask HR whether it is governmental or non-governmental. If non-governmental, read the plan for creditor language, distribution triggers and what happens on leaving.
Check for a Roth source
If you are 50 or older and your prior-year FICA wages are over the threshold, confirm the plan has Roth deferrals and how it handles catch-ups.
Add up the employer money
Include match and nonelective contributions in your 415(c) check, especially if you also have a solo or group 401(k) from side work.
Decide on the IRA piece
With income above the Roth limit of $242,000 to $252,000 joint or $153,000 to $168,000 single, a direct Roth contribution is not available. See the backdoor Roth article linked above, and the tax planning page if the stack needs modeling.
