A retirement plan in the form of an annuity or mutual fund for employees of public sector employers is referred to as:

A retirement plan in the form of an annuity or mutual fund for employees of public sector employers is referred to as:

• A. 403(b)
• B. 457
• C. 401(k)
• D. 414(h)

Answer: (B)

The correct designation for a retirement plan designed for employees of public sector employers, and which can take the form of an annuity or mutual fund, is indeed a 457 plan. A 457 plan specifically caters to state and local government employees, as well as certain non-profit organizations, allowing them to defer income tax on retirement savings. This plan allows employees to contribute a portion of their pay into the plan, which then grows tax-deferred until retirement. One distinct feature of a 457 plan is that it does not impose an early withdrawal penalty for distributions taken before the age of 59½, as long as certain conditions are met, differentiating it from some other retirement plans. In contrast, the other plan options refer to different types of retirement accounts suited to various sectors. A 403(b) plan is primarily available to employees of tax-exempt organizations and can also have an annuity component, but it does not specifically target public sector employees exclusively as the 457 does. A 401(k) plan is common in the private sector and is not focused solely on public sector employees, and a 414(h) is generally a provision allowing for certain retirement contributions for public employees but does not represent a standalone plan like the 457.

The correct designation for a retirement plan designed for employees of public sector employers, and which can take the form of an annuity or mutual fund, is indeed a 457 plan. A 457 plan specifically caters to state and local government employees, as well as certain non-profit organizations, allowing them to defer income tax on retirement savings.

This plan allows employees to contribute a portion of their pay into the plan, which then grows tax-deferred until retirement. One distinct feature of a 457 plan is that it does not impose an early withdrawal penalty for distributions taken before the age of 59½, as long as certain conditions are met, differentiating it from some other retirement plans.

In contrast, the other plan options refer to different types of retirement accounts suited to various sectors. A 403(b) plan is primarily available to employees of tax-exempt organizations and can also have an annuity component, but it does not specifically target public sector employees exclusively as the 457 does. A 401(k) plan is common in the private sector and is not focused solely on public sector employees, and a 414(h) is generally a provision allowing for certain retirement contributions for public employees but does not represent a standalone plan like the 457.