Retirement Accounts
A 457 deferred compensation plan is available to employees of:
457 = government/non-profit employees. No 10% early withdrawal penalty (key difference!).
Complete Analysis & Legal Rationale
457 plans are deferred compensation arrangements available to employees of state and local governments and certain tax-exempt organizations. They allow pre-tax contributions and tax-deferred growth similar to 401(k) plans.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Private corporations offer 401(k) plans, not 457 plans.
Matches the verified teaching point in the explanation.
Federal employees use the Thrift Savings Plan (TSP), not 457 plans.
Self-employed individuals use SEP-IRAs, SIMPLE IRAs, or solo 401(k)s.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.