457 PLAN

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WIRENUT
Posts: 24
Joined: Mon Feb 05, 2018 7:07 pm

457 PLAN

Post by WIRENUT » Mon Feb 12, 2018 8:25 pm

Why participate in a 457 plan? If there is no matching what is the point? Why not just contribute to an existing IRA that one might have ?
My wife contributes to one at work. Its run by Voya. But we are about to open Vangaurd simple IRAs .

chevca
Posts: 1488
Joined: Wed Jul 26, 2017 11:22 am

Re: 457 PLAN

Post by chevca » Mon Feb 12, 2018 8:40 pm

Higher contribution limits means more taxes deferred and the ability to withdraw from a 457b upon separation from service without penalty would be the main reasons.

Are the fees real high? Is it a government or private 457b?

MrNewEngland
Posts: 807
Joined: Sun Sep 28, 2014 11:38 am

Re: 457 PLAN

Post by MrNewEngland » Mon Feb 12, 2018 8:41 pm

WIRENUT wrote:
Mon Feb 12, 2018 8:25 pm
Why participate in a 457 plan? If there is no matching what is the point? Why not just contribute to an existing IRA that one might have ?
My wife contributes to one at work. Its run by Voya. But we are about to open Vangaurd simple IRAs .
My job offers two 457s... one by Voya and one by ICMA-RC. The ICMA-RC plan offers great funds and options (although I only use two: 85% in total stock market index fund and 15% in international index fund).

It’s nothing special bc my 401k offers similar options I invest in. The 457 is nice bc if you sever service for any reason you can access that money penalty free.

WIRENUT
Posts: 24
Joined: Mon Feb 05, 2018 7:07 pm

Re: 457 PLAN

Post by WIRENUT » Mon Feb 12, 2018 8:52 pm

chevca wrote:
Mon Feb 12, 2018 8:40 pm
Higher contribution limits means more taxes deferred and the ability to withdraw from a 457b upon separation from service without penalty would be the main reasons.

Thanks for the reply

Are the fees real high? Is it a government or private 457b?
I have not gotten as far as checking out the fees yet. Its on my list as I navigate through all of this.
It is local government.
Are you saying that If I am an employee, and I leave my job, I cant roll my money into another IRA plan. Sorry for my ignorance. I have never been an employee, and all of this is new to me.

WIRENUT
Posts: 24
Joined: Mon Feb 05, 2018 7:07 pm

Re: 457 PLAN

Post by WIRENUT » Mon Feb 12, 2018 8:53 pm

MrNewEngland wrote:
Mon Feb 12, 2018 8:41 pm
WIRENUT wrote:
Mon Feb 12, 2018 8:25 pm
Why participate in a 457 plan? If there is no matching what is the point? Why not just contribute to an existing IRA that one might have ?
My wife contributes to one at work. Its run by Voya. But we are about to open Vangaurd simple IRAs .
My job offers two 457s... one by Voya and one by ICMA-RC. The ICMA-RC plan offers great funds and options (although I only use two: 85% in total stock market index fund and 15% in international index fund).

It’s nothing special bc my 401k offers similar options I invest in. The 457 is nice bc if you sever service for any reason you can access that money penalty free.
Thanks for the reply

chevca
Posts: 1488
Joined: Wed Jul 26, 2017 11:22 am

Re: 457 PLAN

Post by chevca » Mon Feb 12, 2018 8:55 pm

You could roll it into an IRA too. But, then you would lose the penalty free withdrawals before the minimum age. You would have to leave it in the 457 plan to get the penalty free part though. So, if it's a bad plan with high fees or bad fund choices, that could factor into the decision.

MrNewEngland
Posts: 807
Joined: Sun Sep 28, 2014 11:38 am

Re: 457 PLAN

Post by MrNewEngland » Mon Feb 12, 2018 9:11 pm

WIRENUT wrote:
Mon Feb 12, 2018 8:53 pm
MrNewEngland wrote:
Mon Feb 12, 2018 8:41 pm
WIRENUT wrote:
Mon Feb 12, 2018 8:25 pm
Why participate in a 457 plan? If there is no matching what is the point? Why not just contribute to an existing IRA that one might have ?
My wife contributes to one at work. Its run by Voya. But we are about to open Vangaurd simple IRAs .
My job offers two 457s... one by Voya and one by ICMA-RC. The ICMA-RC plan offers great funds and options (although I only use two: 85% in total stock market index fund and 15% in international index fund).

It’s nothing special bc my 401k offers similar options I invest in. The 457 is nice bc if you sever service for any reason you can access that money penalty free.
Thanks for the reply
Of course.

The other thing I meant to mention is that it allows that much more to be put away in a tax sheltered account. I have to put 6% away towards a pension so that plus my IRA, 401k, 457, and my HSA I can put almost $52k away annually in tax deferred accounts.
I don’t, but I could.

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CyclingDuo
Posts: 1390
Joined: Fri Jan 06, 2017 9:07 am

Re: 457 PLAN

Post by CyclingDuo » Mon Feb 12, 2018 9:58 pm

WIRENUT wrote:
Mon Feb 12, 2018 8:25 pm
Why participate in a 457 plan? If there is no matching what is the point? Why not just contribute to an existing IRA that one might have ?
My wife contributes to one at work. Its run by Voya. But we are about to open Vangaurd simple IRAs .
Why?

It's another salary deducted contribution possibility. So why not?

What all does your wife have available?

Many who have access to a 457b, have the following...

401a Mandatory Pension contribution with employer match
401k/403b voluntary
457b voluntary
HSA
tIRA or Roth IRA


How much of the above does she have available through her work, and does she have enough salary to tap more than one with your combined household income in mind?

What funds in the Voya plan does she have available, and what are the annual administrative fees (wrap fees) on top of the underlying fund fees?

gostars
Posts: 173
Joined: Mon Oct 09, 2017 7:53 pm

Re: 457 PLAN

Post by gostars » Tue Feb 13, 2018 2:05 am

WIRENUT wrote:
Mon Feb 12, 2018 8:52 pm
I have not gotten as far as checking out the fees yet. Its on my list as I navigate through all of this.
It is local government.
Are you saying that If I am an employee, and I leave my job, I cant roll my money into another IRA plan. Sorry for my ignorance. I have never been an employee, and all of this is new to me.
With a 457b, if you were to get laid off, quit, or otherwise leave your employer, you can take the money out of the account and live off it and just pay standard income tax on it. With any other kind of retirement plan, if you take money out before retirement age, you have to pay a penalty on top of taxes, with just a few limited exceptions. Ideally, you would never take money from your own retirement before you retire, but if the worst happens and you need to, at least it's an option.

thewizzer
Posts: 259
Joined: Sun Aug 19, 2012 10:11 pm

Re: 457 PLAN

Post by thewizzer » Tue Feb 13, 2018 4:56 am

I have a 457b through ICMA for my work as a municipal police officer. As others have noted, you can access the money upon separation. That's a big deal for public safety, because typically we retire at a younger age than most employees. Although I also have a Roth, I can't touch that without incurring a penalty before age 59 1/2. With the 457, once I separate from service (including when I retire with a full pension at age 51), I can supplement my pension income with the earnings from my 457 without incurring a penalty. Whatever I draw out annually is considered income for tax purposes.

If you don't plan on touching the money earlier than a 'normal' retirement age, then the benefits are slightly diminished. Personally, I feel that the offerings in my plan are very expensive (49 basis points for an S&P index, for example), but it's still worth it in my position.

WIRENUT
Posts: 24
Joined: Mon Feb 05, 2018 7:07 pm

Re: 457 PLAN

Post by WIRENUT » Tue Feb 13, 2018 5:57 am

chevca wrote:
Mon Feb 12, 2018 8:55 pm
You could roll it into an IRA too. But, then you would lose the penalty free withdrawals before the minimum age. You would have to leave it in the 457 plan to get the penalty free part though. So, if it's a bad plan with high fees or bad fund choices, that could factor into the decision.
Thanks for the perspective.

WIRENUT
Posts: 24
Joined: Mon Feb 05, 2018 7:07 pm

Re: 457 PLAN

Post by WIRENUT » Tue Feb 13, 2018 5:59 am

thewizzer wrote:
Tue Feb 13, 2018 4:56 am
I have a 457b through ICMA for my work as a municipal police officer. As others have noted, you can access the money upon separation. That's a big deal for public safety, because typically we retire at a younger age than most employees. Although I also have a Roth, I can't touch that without incurring a penalty before age 59 1/2. With the 457, once I separate from service (including when I retire with a full pension at age 51), I can supplement my pension income with the earnings from my 457 without incurring a penalty. Whatever I draw out annually is considered income for tax purposes.

If you don't plan on touching the money earlier than a 'normal' retirement age, then the benefits are slightly diminished. Personally, I feel that the offerings in my plan are very expensive (49 basis points for an S&P index, for example), but it's still worth it in my position.
Thanks for sharing

WIRENUT
Posts: 24
Joined: Mon Feb 05, 2018 7:07 pm

Re: 457 PLAN

Post by WIRENUT » Tue Feb 13, 2018 6:03 am

CyclingDuo wrote:
Mon Feb 12, 2018 9:58 pm
WIRENUT wrote:
Mon Feb 12, 2018 8:25 pm
Why participate in a 457 plan? If there is no matching what is the point? Why not just contribute to an existing IRA that one might have ?
My wife contributes to one at work. Its run by Voya. But we are about to open Vangaurd simple IRAs .
Why?

It's another salary deducted contribution possibility. So why not?

What all does your wife have available?

Many who have access to a 457b, have the following...


401a Mandatory Pension contribution with employer match
401k/403b voluntary
457b voluntary
HSA
tIRA or Roth Ira

How much of the above does she have available through her work, and does she have enough salary to tap more than one with your combined household income in mind?

What funds in the Voya plan does she have available, and what are the annual administrative fees (wrap fees) on top of the underlying fund fees?
Thanks for giving me more to think about

dziuniek
Posts: 423
Joined: Mon Jul 23, 2012 2:54 pm
Location: Corrupticut

Re: 457 PLAN

Post by dziuniek » Tue Feb 13, 2018 7:16 am

Don't dismiss your workplace retirement plan options.

I have an institutional total stock market fund with an expense ratio of 0.02% - CHEAPER than what you can get yourself at Vanguard.

Edit:Spelling.

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