Author Topic: 457B Fees- What would you do?  (Read 322 times)

JSMustachian

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457B Fees- What would you do?
« on: August 30, 2019, 01:08:14 PM »
Hello everyone,

I wanted to run this by others and see what you would do. Our 457B (school district) charges the following fees:

0.25% of assets- (capped at $150,000 in assets)
0.42% of assets- Investment adviser fee (Cant opt out, I checked)
0.10% of assets- Custodian/Trustee fee
0.04%- Expense ratio of VTSAX

We expect to have $360,000 (rough estimate) once we FIRE and could face fees of about $2250 a year or more as the account balance continues to grow. I could see this fee doubling once we are in our 50's.

We won't really need the 457B for withdraws because we will have plenty of money in our taxable brokerage and roth conversion ladders but I guess the flexibility would be nice to keep the account.


Would you pay the fees each year or roll the account over into a traditional IRA?


RWD

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Re: 457B Fees- What would you do?
« Reply #1 on: August 30, 2019, 01:49:45 PM »
I would not pay those fees. I'd rather have my money in a taxable account.

MDM

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Re: 457B Fees- What would you do?
« Reply #2 on: August 30, 2019, 02:15:28 PM »
Would you pay the fees each year or roll the account over into a traditional IRA?
As soon as you are allowed to do so, rolling  the account over into a traditional IRA makes sense.

As to the question of whether you should contribute to an account with those fees, the length of time you expect to be stuck with them matters.  See To 401k or not to 401k? That is the question. for more.

FLBiker

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Re: 457B Fees- What would you do?
« Reply #3 on: August 30, 2019, 02:36:47 PM »
Does age factor in?  The nice thing about 457Bs vs TIRAs is the lack of an age limit.  If you'll be at the TIRA age limit when you are looking to withdraw, though, converting them seem to make sense.

JSMustachian

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Re: 457B Fees- What would you do?
« Reply #4 on: August 30, 2019, 03:12:32 PM »
We are 34 right now and plan to FIRE within 6-8 years. We won't need the 457B for the ability to do early withdraws. Right now we are using the 457B to reduce our taxable income.

In the past year it looks like we've paid $236 in fees. Your replies got me thinking about the taxes, if we stop doing the 457B contributions our taxable income will go above the savers credit income limit. So because of the savers credit ($400) being higher than the fees I may keep the 457B for now.

I think we'll definitely plan to roll this account into a traditional IRA once my spouse retires.

Thank you everyone for the replies.