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Texas Payroll/Personnel Resource

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Deferred Compensation Plans
401(k) and 457 Texa$aver Program

State agency employees who are not employed by an institution of higher education (which has the meaning assigned by Texas Education Code, Section 61.003, except the term does not include a public junior college) can enroll in both the Texa$aver 401(k) and 457 plans.

The current administrator of the Texa$aver program will advise employees on the availability and the tax consequences of choosing pre- or post-tax deductions. As established in Internal Revenue Service Code, the limits on the amounts that can be deferred to the accounts are:

  • $23,500 per year in 2025 if the employee is age 49 or younger.
  • $31,000 per year in 2025 if the employee is age 50-59 or 64 or older.
  • $34,750 per year in 2025 if the employee is age 60-63.

An employee can choose to have up to the relevant maximum deducted in a tax year to a 401k account, and the same amount to a 457 account if the employer offers both. The amounts deducted can be pre-tax deductions, post-tax deductions or a combination of both.

Employees of higher education institutions and community colleges may enroll in a 457 plan if their institutions choose to offer such a plan.

When employees retire or leave state employment, they do not have to withdraw or roll over their Texa$aver account money.

Sources

Internal Revenue Code, Sections 401(a)(13)(A), (k); 72(p), 402(g)(1), (5); 457(a)-(e), (g); Texas Government Code, Sections 609.001(1)-(2), (5), (8), (10), (11), 609.007(b)-(c), 609.502(a)-(c); Texas Revised Civil Statutes, Article 6228a-5, Sections 1, 2(b); 34 Texas Administrative Code Section 87.5(a).