The Louisiana Deferred Compensation Plan is a 457(b) retirement savings program open to state and local government employees, letting you set aside up to $24,500 in 2026 on a tax-deferred or Roth basis. The plan sits within the Department of the Treasury and is overseen by a nine-member commission established under Louisiana Revised Statutes Title 42.1Louisiana State Legislature. Louisiana Code RS 36:769 – Transfer of Boards, Commissions, Departments, and Agencies to Department of the Treasury Day-to-day recordkeeping, the online login, and participant services run through Empower, which has held the administrator contract with the state for more than 35 years.2Empower. State of Louisiana Remains with Empower Continuing 35-Year Partnership
Who Can Enroll
The plan covers a broad range of Louisiana public employees, including people working for state agencies, public schools, and local governments. Full-time, part-time, and temporary employees who receive a W-2 are all eligible.1Louisiana State Legislature. Louisiana Code RS 36:769 – Transfer of Boards, Commissions, Departments, and Agencies to Department of the Treasury
Enrollment goes through your HR department or the plan’s website. You provide basic personal and employment information, choose a contribution amount per pay period, and select investments. Contribution amounts and investment allocations can be adjusted at any time.
2026 Contribution Limits
The standard annual deferral limit for 2026 is $24,500. Your total contributions for the year, excluding rollovers, cannot exceed that figure or 100% of your includible compensation, whichever is less.3Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted
Three catch-up provisions raise that ceiling in specific situations:
- If you turn 50 or older during 2026, you can contribute an additional $8,000, for a total of $32,500.3Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted
- If you turn 60, 61, 62, or 63 during 2026, the SECURE 2.0 enhanced catch-up allows an extra $11,250, for a total of $35,750.4Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- During the three tax years right before you reach the plan’s normal retirement age, the special 457(b) catch-up lets you defer up to twice the standard limit — $49,000 for 2026 — but only to the extent you underused the basic limit in earlier years. You cannot combine this with the age 50 catch-up in the same year; the administrator uses whichever option produces the higher amount.5Internal Revenue Service. Section 457(b) Plan of Governmental and Tax-Exempt Employers – Catch-Up Contributions
Traditional or Roth Contributions
The plan offers both pre-tax (traditional) and after-tax (Roth) contributions. Traditional contributions reduce your taxable income now, and every dollar you withdraw in retirement is taxed as ordinary income. Roth contributions are taxed going in, but qualified withdrawals of contributions and earnings come out tax-free.6Internal Revenue Service. IRC 457(b) Deferred Compensation Plans
The choice comes down to whether you expect a higher tax rate now or in retirement. Many participants split contributions between both types. Either way, $24,500 is the combined 2026 ceiling for traditional and Roth deferrals together, not a separate limit for each.
The Early Withdrawal Advantage
The biggest structural difference between a governmental 457(b) and a 401(k) or 403(b) shows up if you need money before age 59½. Distributions from a governmental 457(b) plan are not subject to the 10% early withdrawal penalty that applies to most other retirement accounts. The only exception is money you rolled into the 457(b) from a different plan type such as an IRA or 401(k); that rolled-in portion keeps its penalty if withdrawn early.7Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
This matters most for people who retire or leave state service before 59½. You still owe federal and Louisiana income tax on traditional 457(b) withdrawals, but no 10% penalty on top. Planning your withdrawals around tax brackets, especially if you have other retirement income, can save meaningful money over time.
Getting Money Out While Still Employed
Before you separate from service, access to your account is limited. Two options exist.
Unforeseeable Emergency Withdrawals
Federal rules allow a withdrawal for a severe financial hardship caused by events beyond your control.8Office of the Law Revision Counsel. 26 USC 457 – Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations The bar is higher than a 401(k) hardship withdrawal. Qualifying events generally include:
- A sudden illness or accident affecting you, your spouse, or a dependent, where unreimbursed costs cause severe hardship
- Casualty loss to property from a natural disaster or similar event not covered by insurance
- Imminent foreclosure or eviction from your primary residence when no other resources can prevent it
- Funeral expenses for a spouse, dependent, or named beneficiary
Buying a home, paying off credit cards, covering divorce costs, tuition, and tax bills are specifically excluded. Even a genuine emergency may not qualify if you could resolve it by using insurance, liquidating other assets, or stopping plan contributions. The withdrawal is capped at what you actually need to cover the emergency plus any taxes it triggers.
Loans
Governmental 457(b) plans are permitted to offer loans, though not every plan does. Where allowed, federal rules cap borrowing at the lesser of 50% of your vested balance or $50,000.9Internal Revenue Service. Retirement Topics – Plan Loans Repayment generally must occur within five years, with at least quarterly payments; a longer term is available if the loan is used to buy your primary residence. Miss payments and the outstanding balance is treated as a taxable distribution.
Leaving State Employment
Once you separate from service, you have full access to the balance without the 10% penalty, regardless of your age. Your choices:
- Leave the money in the plan, where it keeps growing tax-deferred until you begin withdrawals or reach the RMD age.
- Directly roll it to a traditional IRA, a new employer’s 401(k) or 403(b), or another governmental 457(b), with no immediate tax.
- Convert to a Roth IRA, which triggers ordinary income tax on the full converted amount that year in exchange for tax-free withdrawals later.
- Take a lump-sum distribution, which becomes fully taxable that year and can push you into a higher bracket.
Direct rollovers move funds straight from the plan to the receiving account. An indirect rollover sends the check to you, with taxes withheld, and gives you 60 days to deposit the full amount, including the withheld portion you have to replace out of pocket, into another eligible retirement account. Miss the 60-day window and the whole distribution becomes taxable.
Required Minimum Distributions
Under SECURE 2.0, required minimum distributions from a 457(b) must generally begin by April 1 of the year after you turn 73.10Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs The age moves to 75 for individuals born in 1960 or later, effective in 2033. If you keep working for the state past the trigger age, the plan may let you delay RMDs until actual separation; check with the administrator.
Missing an RMD is costly. The IRS charges a 25% excise tax on the shortfall between what you should have withdrawn and what you did. Catch it and correct it within the roughly two-year correction window and the penalty drops to 10%.11Office of the Law Revision Counsel. 26 U.S. Code 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
Naming a Beneficiary
The beneficiary you list on the account controls who receives your balance if you die before spending it all. Governmental 457(b) plans are not subject to the federal spousal consent rules that apply to 401(k) plans, so a non-spouse beneficiary designation does not automatically require your spouse’s signature. Louisiana law may impose its own requirements, so confirm with the plan administrator before naming a non-spouse beneficiary.
The designation on file overrides your will. If the form still lists an ex-spouse, that person receives the money regardless of what your will says. Review your designation after any marriage, divorce, or birth in the family.
Who Runs the Plan
The Louisiana Deferred Compensation Commission governs the plan, setting investment policy, approving fund options, and reviewing financial reports.12Legal Information Institute. Louisiana Administrative Code Title 32 Section VII-105 – Duties of Commission Nine members sit on the commission, including three participant members elected by plan participants, giving people actually enrolled in the plan a direct voice on menu changes and fees.13Louisiana State Legislature. Louisiana Laws – Deferred Compensation Commission Composition
Empower handles recordkeeping, participant communications, investment platform access, and distributions. That is where you go to log in, check a balance, change a contribution rate, reallocate investments, or request a payout.
One boundary worth flagging: governmental 457(b) plans like this one are not covered by ERISA. Some protections you may have read about in the private-sector context, including automatic spousal inheritance rules, do not apply here by default. Louisiana statutes and the plan document fill part of that gap, but not always in the same way. When something is unclear, ask the commission or Empower directly rather than relying on general ERISA guidance.