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Best ER retirement account ever!!!- the 457
08-03-2009, 09:29 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Best ER retirement account ever!!!- the 457
For anyone who works for the government or states, plans to ER and has access to a 457, max it out!! The great thing about a 457 is it's tax deferred, but you have access to the money with no penalty as soon as you retire.
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08-04-2009, 05:02 AM
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#2
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Recycles dryer sheets
Join Date: Mar 2009
Posts: 357
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That's a good point. I have the option to sign up for a 457 but my 403b has much better funds and is through a better company.
Does anyone know if you can 72(t) while you're semi-retired (doing freelance self-employed w*rk)?
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08-04-2009, 07:21 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by bank5
That's a good point. I have the option to sign up for a 457 but my 403b has much better funds and is through a better company.
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The flexibility of the 457 is what really makes it a great ER tool. An account that is tax deferred that you can get at at any time after ER with no penalty.
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08-04-2009, 08:54 AM
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#4
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Full time employment: Posting here.
Join Date: Apr 2006
Posts: 897
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Quote:
Originally Posted by bank5
That's a good point. I have the option to sign up for a 457 but my 403b has much better funds and is through a better company.
Does anyone know if you can 72(t) while you're semi-retired (doing freelance self-employed w*rk)?
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That's the main problem with my 457. The funds suck, and some of the expense ratios are 2+ %. Plus the management fees or whatever else. Crazy. I found a Vanguard Growth Life Strategy Fund for 1.33% including everything, so I went with that for the 4% match only.
-CC
__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
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08-04-2009, 09:08 AM
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#5
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Moderator
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 25,290
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I maxed out mine for the last few years before retiring but we haven't touched it yet. Even the most expensive fund fee is not over 1%.
__________________
When I was a kid I wanted to be older. This is not what I expected.
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08-04-2009, 09:18 AM
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#6
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Recycles dryer sheets
Join Date: Mar 2009
Posts: 357
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403b vs 457
Since my 457 has higher expense ratios there must be a break even point between paying the 10% fee vs maxing out the 457. I wonder if a math whiz on here could figure out the equation
What happens if you open a 457 but leave your j*b before you retire? Is it best to roll it over to an IRA?
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08-04-2009, 09:37 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by bank5
Since my 457 has higher expense ratios there must be a break even point between paying the 10% fee vs maxing out the 457. I wonder if a math whiz on here could figure out the equation
What happens if you open a 457 but leave your j*b before you retire? Is it best to roll it over to an IRA?
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If you do that you lose the access to it penalty free before 59.5, which for me is the whole point.
My 457 has a some ok index fund choices with 0.5% expenses and also a TD Ameritrade brokerage option. But they really push you towards a set of target retirement funds with 0.25% expenses.
http://www.mass.gov/smartplan/invest...entoptions.htm
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08-04-2009, 01:10 PM
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#8
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Full time employment: Posting here.
Join Date: Jul 2007
Posts: 678
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Yup, 457 is great. Too bad I didn't figure it out until 2 years before I left govt work. They don't really advertise the lack of an age limit, for fear of the rage of the general public (ie non-govt workers)?
Also, for most people, it's probably assumed that one won't retire until after 59.5. On this board, though, it's a great advantage.
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457 is great as long as your government remains solvent
08-04-2009, 01:38 PM
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#9
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Dryer sheet wannabe
Join Date: Oct 2006
Posts: 10
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457 is great as long as your government remains solvent
My wife accumulated funds in a 457. The administrative costs were substantial at first but improved when the composition of the County Board changed.
The only thing that really bothered me is that the creditors of whatever governmental unit is running the 457 may have access to your funds. This is not the case in 401Ks in private industry.
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08-04-2009, 04:10 PM
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#10
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Recycles dryer sheets
Join Date: Mar 2009
Posts: 357
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Quote:
Originally Posted by nun
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Those look like solid options. Mine is with Prudential and I took a quick browse last night and was pretty disappointed with the funds. I suppose I could split it between my 457 and 403b but I'll probably wait for now.
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08-04-2009, 04:35 PM
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#11
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Recycles dryer sheets
Join Date: Sep 2008
Posts: 60
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Egtrra
I thought with the passing of EGTRRA 2001, the contribution limits for a 403(b) and a 457(b) were decoupled. As in, this year you could contribute $16,500 to the 403(b) and $16,500 to the 457(b) for a total of $31,000 of contributions (ignoring catch-up provisions).
Admittedly, I haven't looked at this in a while. Please correct me if I have it wrong...
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08-04-2009, 04:40 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by Uncle Drew
I thought with the passing of EGTRRA 2001, the contribution limits for a 403(b) and a 457(b) were decoupled. As in, this year you could contribute $16,500 to the 403(b) and $16,500 to the 457(b) for a total of $31,000 of contributions (ignoring catch-up provisions).
Admittedly, I haven't looked at this in a while. Please correct me if I have it wrong...
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Yes that's right, I do both 457 and 403b
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08-04-2009, 05:53 PM
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#13
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Recycles dryer sheets
Join Date: Mar 2009
Posts: 357
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Quote:
Originally Posted by Uncle Drew
I thought with the passing of EGTRRA 2001, the contribution limits for a 403(b) and a 457(b) were decoupled. As in, this year you could contribute $16,500 to the 403(b) and $16,500 to the 457(b) for a total of $31,000 of contributions (ignoring catch-up provisions).
Admittedly, I haven't looked at this in a while. Please correct me if I have it wrong...
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WOW, I didn't know that...that's good to know!
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08-04-2009, 06:05 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Mar 2009
Location: Pittsburgh, PA suburbs
Posts: 1,796
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I contribute quite a bit to my 457(b). I am not enamored of the choices in the funds but the fees are quite low to be sure. I had a horrible 4th quarter in 2008 and worse 1st quarter of 2009. The last time I looked my funds were still worth less than what I put in, but they are moving up substantially. The way I look at it, I would have lost most of the money in taxes so I preferred to stash the money here. I have reconfigured my selections over the years and am now about one third in bonds and two thirds in fairly aggressive growth funds. I am also vested in a pension plan and have had to contribute 9 percent of my pre-tax salary from day one.
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