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Best ER retirement account ever!!!- the 457
Old 08-03-2009, 10:29 PM   #1
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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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Old 08-04-2009, 06:02 AM   #2
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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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Old 08-04-2009, 08:21 AM   #3
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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.
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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Old 08-04-2009, 09:54 AM   #4
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Originally Posted by bank5 View Post
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)?

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
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Old 08-04-2009, 10:08 AM   #5
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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%.
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403b vs 457
Old 08-04-2009, 10:18 AM   #6
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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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Old 08-04-2009, 10:37 AM   #7
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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?
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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Old 08-04-2009, 02:10 PM   #8
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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
Old 08-04-2009, 02:38 PM   #9
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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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Old 08-04-2009, 05:10 PM   #10
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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
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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Egtrra
Old 08-04-2009, 05:35 PM   #11
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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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Old 08-04-2009, 05:40 PM   #12
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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...
Yes that's right, I do both 457 and 403b
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Old 08-04-2009, 06:53 PM   #13
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Quote:
Originally Posted by Uncle Drew View Post
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...
WOW, I didn't know that...that's good to know!
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Old 08-04-2009, 07:05 PM   #14
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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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