Author Topic: State employee. Amm being offered 457 (b) plan in addition to state pension  (Read 515 times)

the_fella

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What would be the advantages or disadvantages of the 457 (b) versus just investing on my own. I am aware that 457 (b) funds are pre-tax.  The plan's website doesn't really make it seem like there's much advantage to the plan beyond a traditional 401 (k) or similar.

Rural

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Pretax, and also, unlike the 401K, you can make withdrawals without penalty after you separate from employment.


With a pension, also look into whether it would be possible to buy time in the pension with a rollover from the 457. It might mean you can get to vesting (and freedom) using pretax money at some point.

maizeman

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I mean the advantages of a 401k are already pretty nice. As Rural points out, on top of that 457 plans add the ability to make penalty free withdrawals any time after you leave you current employer (no need to hit some arbitrary age threshold like the 401k).

The other perk is that the $18k/year you can put into your 457 account is a separate "bucket" from that used for 401k and 403b plans. So if you employer ever offers a 403b plan, you start moonlighting in the private sector somewhere that offers a 401k, or you create a side hustle and set up a solo 401k plan, you can save twice as much pretax as most people ($18k to 457 an a separate $18k to 401k/403b).

the_fella

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The money invested in the pension is also pre-tax. That's a great idea about buying time. I'll have to look into whether they allow that. Regardless, you're vested after 10 years service credit, but cannot retire before 67 unless you have 30 years of credit, which allows retirement at 57. I'm in my late 20s and am almost 3 years in.

the_fella

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My employer will never offer a 403(b) unless forced to. I work for a private company that contracts with school districts in the area. I'm a school bus driver but work for the private company. By virtue of paying into SERS, I am also eligible for my state's 457(b).