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How Is a 457(f) Deferred Compensation Plan Taxed, and When Does the Tax Hit?

by Eric Courage | Jun 14, 2026 | Deferred Compensation

A 457(f) plan is taxed at vesting, not at payout. The full value of the benefit becomes ordinary income in the year your risk of forfeiture lapses, even if you do not receive a dollar of cash until years later. This single timing rule is the most important and most...

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