My wife is a speech pathologist for a school district in TX and as such has access to both a 403B and 457B. We have been doing the 403B, and I have avoided the 457B due to the higher fees, but I am starting to re-think that approach.
My question has a few layers so I will try to late it out as succinctly as possible:
1. If the only options for withdrawal upon separation are lump sum or rollover, does that negate the benefit of the 457B or is it still worth it to get the tax savings and roll to an IRA? In other words we conceivably can't use this money to fund any gap years.
2. Should I do the 457B, but then change either the 403b or 401k to be ROTH? Based on this years income this will be money from the 22% tax bracket (could be 24% bracket in future years if that matters).
3. Should I skip the 457B and just go with a taxable account?
457B fees & info:
TCG Advisors, LP advisory fee of .42% of account assets annually
TCG Administrators 3rd Party Administrator annual fee of $22 per year &
TCG Administrators 3rd Party Administrator annual fee of .25% of account assets Matrix Trust, Custodian/Trustee Fee of .10%
Vanguard VTSAX .04%
Total fees = .81% + $22/year
I need to call the plan administrator because the info on-line is limited, but from I can find the only options for distributions are:
- Receive a lump-sum distribution (subject to ordinary income tax)
- Rollover your account balance (i’m assuming to an IRA)
- Leave in the Plan until a future date but no later than age 70½ or retirement (i am assuming once you do pull it out you have 1 of the first two options)
Our info:
- Ages 39 & 38
- 2 kids under 5 and 1 on the way
- Net income: 230k, about $170k Gross (varies year to year based on bonuses, but typically not lower)
- We Max out 401k, 403B, HSA, FSA (dependent care), & Roth IRA’s. Both the 401k and 403B are in traditional accounts, but both employers offer ROTH versions.
- We contribute about $6k/kid to 529's
- Don’t plan to FIRE for at least another 10 years or so
Can provide detailed investment #'s if that will make a difference.