457 Roth or traditional + Brokerage
Why I think the traditional 457 is a better option. Please let me know what you think? Am I looking at this right.
Letís say you are going to max out your 457 and are currently in 22% tax bracket. Right now the maximum contribution amount is $19500
Option 1 : Roth 457
Max out would cost: $23,790 to invest $19500
Option 2 Traditional 457
Max out would cost: $19500 to invest $19500
BUT: you also invest $4290 (the cost of the Roth in option 1) into a brokerage account
After 20 years of investing both 457 accounts would equal the same. Letís say we averaged a 10% return. Your total would be $1,233,974
Brokerage Account 10% return = $271,094
You start withdrawing 6%
Option 1 Roth: $74,038.44
Option 2 Traditional: $57,750 after taxes
Brokerage: $13,826 after taxes
Option 1 is $2462 more but it adds more risk and not worth it. Also the more years you invest the traditional + brokerage actually ends up providing more income.
the traditional 457 accounts allows withdrawals before 59 1/2 without Penalty when you leave your job.
The Roth 457 you have to be 59 1/2 to withdraw funds otherwise you have a Penalty
Do you agree Traditional 457 is better?