Any downside to moving 457b account to Vanguard ?

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Java11
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Any downside to moving 457b account to Vanguard ?

Post by Java11 » Thu Dec 06, 2018 8:00 pm

I'm a recent retiree with about $650,000 in my 457 account with Prudential. Not a horrible plan but it lacks an International index option. Only International option is American Funds Europacific Growth and Oppenheimer Developing Markets Fund. I would prefer rolling it over to Vanguard with my existing account for simplicity and the better index options. Is there any benefit to leaving it in place?

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sergeant
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Re: Any downside to moving 457b account to Vanguard ?

Post by sergeant » Thu Dec 06, 2018 8:04 pm

They will only take it as an IRA. IRA's have different withdrawal rules than a 457b. Also, if you're using the stable value fund in your 457b you won't have that option at Vanguard in an IRA.
Lincoln 3 EOW!

retire2022
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Re: Any downside to moving 457b account to Vanguard ?

Post by retire2022 » Thu Dec 06, 2018 10:31 pm

Java11 wrote:
Thu Dec 06, 2018 8:00 pm
I'm a recent retiree with about $650,000 in my 457 account with Prudential. Not a horrible plan but it lacks an International index option. Only International option is American Funds Europacific Growth and Oppenheimer Developing Markets Fund. I would prefer rolling it over to Vanguard with my existing account for simplicity and the better index options. Is there any benefit to leaving it in place?
Java11, my retired co-worker transferred government 457b plan to Vanguard, in NYS there is exemption of state taxes up to 20K, additionally if you are under 59.5 there is no early 10% penalty. It took about a month to do the transfer.

chevca
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Re: Any downside to moving 457b account to Vanguard ?

Post by chevca » Thu Dec 06, 2018 11:16 pm

Yes, the benefit of leaving it where it is would be not having to worry about the tax penalty it you're under 59.5 years old. If you roll it over to an IRA, that goes away.

How old are you?

Java11
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Re: Any downside to moving 457b account to Vanguard ?

Post by Java11 » Fri Dec 07, 2018 12:06 am

Retire2022,
How does the NY. exemption of state taxes up to 20K work?

Chevca,
I'm 55. Wasn't planning on taking withdrawals from the account for awhile but it's good to know you lose the penalty free option.

Thank you for the responses.

krow36
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Re: Any downside to moving 457b account to Vanguard ?

Post by krow36 » Fri Dec 07, 2018 2:03 am

You might consider keeping only a part of the expensive 457 account with Prudential and rolling the rest into an IRA at Vanguard. You can calculate how much you'll save each year by multiplying the average ER times the balance. For example 300k with an ER of 1% has an annual cost of $3000. If you moved 300k to Vanguard, an average ER of 0.07% will cost you $210. After you reach age 59.5, the 457 account looses its only advantage over an IRA. :D

jgt808
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Re: Any downside to moving 457b account to Vanguard ?

Post by jgt808 » Fri Dec 07, 2018 6:12 am

I also have a4 57b with prudential, state job. I am 49 and leaving it there for two reasons 1) ability to withdrawl prior to 59.5 w/o penalty gives me peace of mind 2) It has a stable value fund currently 3.2% which my Vanguard account doesn't. I will eventually split my fixed income in bonds/stable value/TIAA traditional. Nice to have those options with my 457b

Java11
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Re: Any downside to moving 457b account to Vanguard ?

Post by Java11 » Fri Dec 07, 2018 9:31 am

Krow,
Keeping some and rolling the rest into a Vanguard IRA may make the most sense for me.

jgt808,
Wow, 3.2% for your Prud. Stable Value fund is substantially better than mine. I just checked and mine is showing (10/01/18 - 12/31/18 2.29%).

Thanks

retire2022
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Re: Any downside to moving 457b account to Vanguard ?

Post by retire2022 » Fri Dec 07, 2018 5:49 pm

Java11 wrote:
Fri Dec 07, 2018 12:06 am
Retire2022,
How does the NY. exemption of state taxes up to 20K work?
My retired NY friend doubled check with his accountant and it applies to all retirement accounts Traditional IRAs and 457b plans. As for anything else, I'm not sure what the mechanics will be. Certainly by next year tax filing, I will know more. I plan to transfer half of my 457b assets once I leave employment, this way I will be eligible for Vanguard flagship services.

krow36
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Re: Any downside to moving 457b account to Vanguard ?

Post by krow36 » Fri Dec 07, 2018 9:18 pm

retire2022 wrote:
Fri Dec 07, 2018 5:49 pm
Java11 wrote:
Fri Dec 07, 2018 12:06 am
Retire2022,
How does the NY. exemption of state taxes up to 20K work?
My retired NY friend doubled check with his accountant and it applies to all retirement accounts Traditional IRAs and 457b plans. As for anything else, I'm not sure what the mechanics will be. Certainly by next year tax filing, I will know more. I plan to transfer half of my 457b assets once I leave employment, this way I will be eligible for Vanguard flagship services.
This NY State publication covers the state income tax on retirement funds:
https://www.tax.ny.gov/pdf/publications ... /pub36.pdf

retire2022
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Re: Any downside to moving 457b account to Vanguard ?

Post by retire2022 » Sat Dec 08, 2018 12:04 pm

krow36 wrote:
Fri Dec 07, 2018 9:18 pm

This NY State publication covers the state income tax on retirement funds:
https://www.tax.ny.gov/pdf/publications ... /pub36.pdf
thank you again krow36, I'm impressed by your research skills, Java11 check pages page 12, page 14-17

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