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457, best investment ever
Old 10-19-2006, 07:06 AM   #1
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457, best investment ever

I have to thank mja for letting me know about 457 plans. They are available to state and government employees and they must be the bst deal in town. Their features are:

Annual limit 2006 is $15000
You put in money before state and federal tax
the money grows tax free
Distributions are taxed as income.

ok so they seem pretty much like a 401k or 403b, but here's the advantage.

You can get your money out without penalty as soon as you leave employment. you don't have to wait until 59 1/2. So if you have access to one fund it.
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Re: 457, best investment ever
Old 10-19-2006, 07:34 AM   #2
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Re: 457, best investment ever

You can contribute $20k per year if you include the catch-up provision for folks over a certain age -- 50 I think.

Yes it is a good deal. A better one is a 403B where your employer matches. Wish I'd had that one years ago.
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Re: 457, best investment ever
Old 10-19-2006, 08:22 AM   #3
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Re: 457, best investment ever

Quote:
Originally Posted by Rich_in_Tampa
You can contribute $20k per year if you include the catch-up provision for folks over a certain age -- 50 I think.

Yes it is a good deal. A better one is a 403B where your employer matches. Wish I'd had that one years ago.
Where I used to work we had a match in our 457. Also, we were allowed to catch up if we were within 3 years of the date we would be eligible for retirement, even if that's before we turned 50.
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Re: 457, best investment ever
Old 10-19-2006, 08:37 AM   #4
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Re: 457, best investment ever

Quote:
Originally Posted by Patrick
Where I used to work we had a match in our 457. Also, we were allowed to catch up if we were within 3 years of the date we would be eligible for retirement, even if that's before we turned 50.
I work at a state university so we have a mandatory state plan in which we choose either a DB or DC option and have to contribute
11% of our salary and the state puts in 5%. Then I have access to the state employees 457 and the university 403b - there are no matches in these plans, but I can put $15k/year into each.
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Re: 457, best investment ever
Old 10-19-2006, 08:44 AM   #5
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Re: 457, best investment ever

Quote:
Originally Posted by nun
I work at a state university so we have a mandatory state plan in which we choose either a DB or DC option and have to contribute
11% of our salary and the state puts in 5%. Then I have access to the state employees 457 and the university 403b - there are no matches in these plans, but I can put $15k/year into each.
I'd definitely do the matching plan first - don't turn down free money! If I still had funds to invest after that, I'd put them in the 457 or 403B.
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Re: 457, best investment ever
Old 10-19-2006, 08:50 AM   #6
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Re: 457, best investment ever

Quote:
Originally Posted by Patrick
I'd definitely do the matching plan first - don't turn down free money! If I still had funds to invest after that, I'd put them in the 457 or 403B.
The first paln is mandatory! The 457 has the advantage over the 403b in that you can get at the money penalty free as soon as
you leave employment. So do the 457 before the 403b all things (like any matches) being equal
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Re: 457, best investment ever
Old 10-19-2006, 09:08 AM   #7
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Re: 457, best investment ever

I would also add as other folks have mentioned that their plan options are pretty good for these, too....several low cost index funds...

You dang state government employees with your defined ben. pensions that allow you to retire at age 55 and the 457 plan as another tool to go earlier....
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Re: 457, best investment ever
Old 10-19-2006, 09:18 AM   #8
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Re: 457, best investment ever

Quote:
Originally Posted by Maddy the Turbo Beagle
You dang state government employees with your defined ben. pensions that allow you to retire at age 55 and the 457 plan as another tool to go earlier....
I highly recommend civil service (Mr. Gault's condemnations notwithstanding). I did 27.5 years and am retired at 49 with a very good pension.
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Re: 457, best investment ever
Old 10-19-2006, 09:57 AM   #9
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Re: 457, best investment ever

Quote:
Originally Posted by Patrick
Where I used to work we had a match in our 457. Also, we were allowed to catch up if we were within 3 years of the date we would be eligible for retirement, even if that's before we turned 50.
actually, the plan I have has 2 catch-up provisions, and I think hey were both based in federal law.

1) as discussed, could contribute $20,000 per year after age 50
2) could make up previously-missed contributions up to $30,000 per year if within 3 years of normal retirement age. You had to elect this option and it was irrevocable (i.e. once you started the 3 years, those 3 were all you got...after that if you didn't retire, you would revert back to option 1 above)
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Re: 457, best investment ever
Old 10-19-2006, 02:19 PM   #10
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Re: 457, best investment ever

Quote:
Originally Posted by bosco
actually, the plan I have has 2 catch-up provisions, and I think hey were both based in federal law.

1) as discussed, could contribute $20,000 per year after age 50
2) could make up previously-missed contributions up to $30,000 per year if within 3 years of normal retirement age. You had to elect this option and it was irrevocable (i.e. once you started the 3 years, those 3 were all you got...after that if you didn't retire, you would revert back to option 1 above)
I've read that there is a 20% mandatory tax witholding when you take a 457 plan distribution. If your annual income puts you in the
15% tax bracket do you get the extra 5% witheld back?
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Re: 457, best investment ever
Old 10-19-2006, 02:23 PM   #11
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Re: 457, best investment ever

Quote:
Originally Posted by nun
I've read that there is a 20% mandatory tax witholding when you take a 457 plan distribution. If your annual income puts you in the
15% tax bracket do you get the extra 5% witheld back?
Yes, there is a 20% withholding, and yes, you get the 5% back on your tax return (assuming you are owed a refund).
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