I was finally able to resolve the issue. It turns out that there are two types of 457(b) plans, governmental and non-govermental. The former allows catch-up contributions to 457(b) but the other one does not. So I called my employer and was told that we have a governmental 457(b) plan. There is a question in TurboTax that asks specifically whether your employer is state or local government. I previously answered "No" to the question but when I answered correctly "Yes", I did not get the error about excess 457(b) contributions and I was able to file successfully my returns. I hope that this resolution will help others who may be in the same situation.
