I will look into the 457 options. My understanding was I could take that out before 59.5. Other than that I really don't know much differences between the 401 and 457 options.
My question is in reference to fees. What should I look for in a 457 / 401 offering from my employer before I take the plunge? In other words would there be any scenario where a offering / product could be so bad it would be better off investing in a taxable product (such as betterment) instead? Remember I have no match at my workplace for 401 / 457 accounts. Another thing my "mind" has always thought about is if I put it in a 401 / 457 and I needed it I would likely not have such easy access to it as I do in a taxable account, but I'm sure that's the wrong way to think about it.
And IDK why I have that much, just used to it I guess. But I could surely put it to work instead.
My questions are should I be investing in a 401 / 457 vs the betterment taxable account even if there is no match?Yes, for the reasons already given...plus one other: you will likely be able to contribute enough that your MAGI will drop below $61K thus making you eligible for a fully deductible tIRA.
Should I be investing in any other products or be investing in a different manner than what I listed?If your total (excluding tax) expenses really are ~$24K/yr, your marginal tax rate in retirement could be very low. Low enough, in fact, to make Traditional better than Roth for you even if you drop into the 15% marginal bracket now. You might spend some time with www.i-orp.com (or other tools mentioned in https://www.bogleheads.org/forum/viewtopic.php?t=115839#p1686175). E.g., deferring your pension might be worthwhile.
Category | Monthly | Comments | Annual |
Salary/Wages for person #1 | $6,250 | $75,000 | |
HSA/Pension | $275 | $3,300 | |
FICA base salary/wages | $5,975 | $71,700 | |
Traditional IRA | $458 | At maximum | $5,500 |
401(k) / 403(b) / TSP / etc. | $1,200 | Room to increase? | $14,400 |
457 plans | $1,500 | At maximum | $18,000 |
Income subject to IRS tax | $2,817 | $33,800 | |
Federal Total Income | $2,817 | $33,800 | |
Federal tax | $255 | 2015 rates, S, stand. ded., 1 exempt. | $3,064 |
State/City tax | $78 | Guess, using 4.00% * Fed. Taxable | $940 |
Soc. Sec. | $370 | Assumes 1 earner paying | $4,445 |
Medicare | $87 | $1,040 | |
Total income taxes | $791 | $9,489 | |
Income before other expenses | $2,026 | $24,311 | |
Monthly Average Expenses: | |||
Miscellaneous | $2,000 | $24,000 | |
Non-mortgage total | $2,000 | $24,000 | |
Total Expense | $2,000 | $24,000 | |
Total to invest | $26 | $311 | |
Summary: | |||
"Gross" income | $6,250 | $75,000 | |
Income taxes | $791 | $9,489 | |
After-tax income | $5,459 | $65,511 | |
IRA+401k/403b/TSP/457 (Savers' credit) | $3,158 | $37,900 | |
Living expenses | $2,275 | $27,300 | |
After-tax investable | $26 | $311 | |
Time to FIRE?: | |||
Time to FIRE | 9.25 | years | |
Safe Withdrawal Rate | 4.00% | percent | |
Real return on tax-deferred investments | 6.00% | percent | |
Real, after tax, return on taxable investments | 5.10% | percent | |
Expected retirement total tax rate | 10.00% | ||
Current Savings | |||
Taxable | $110,000 | ||
Tax-deferred (e.g. trad. IRA/401k) | $20,000 | ||
Roth | $3,000 | ||
Projected Savings at Retirement | |||
Taxable | $177,834 | ||
Tax-deferred (e.g. trad. IRA/401k) | $485,466 | ||
Roth | $5,143 | ||
Total projected stash | $668,442 | ||
Projected Expenses in Retirement | |||
Non-loan, non-work expenses | $24,000 | ||
Income taxes | $2,667 | ||
Total | $26,667 | ||
Stash needed for retirement @4.0% SWR | $666,667 | ||
Have $1,776 extra. |
Filing Status | 1 | 1=S, 2=MFJ | |
# Exempt. | 1 | ||
# Children <17 | 1 | ||
# of earners | 1 | ||
Total Income | $33,800 | ||
Std. Deduct. | $6,300 | ||
Act. Deduct. | $6,300 | ||
Exemption | $4,000 | ||
AGI | $33,800 | ||
MAGI | $39,300 | ||
Taxable | $23,500 | ||
Tax | $3,064 | ||
Savers' credit | $0 | ||
Tax after n-r credit | $3,064 | ||
Child Tax Cred. | $0 | ||
EIC | $0 | ||
Net Tax | $3,064 | ||
Monthly | $255 | ||
State tax | $940 | 4.% | |
Item. Deduct. | $940 |
My question is in reference to fees. What should I look for in a 457 / 401 offering from my employer before I take the plunge? In other words would there be any scenario where a offering / product could be so bad it would be better off investing in a taxable product (such as betterment) instead?Good question. See https://www.bogleheads.org/forum/viewtopic.php?f=10&t=172808 for some discussion that may help you answer it - let us know if not.
Thank you for the replies. I checked out the links, and it would appear some of the posts are years old now, which makes me wonder if the data behind any of the links supplied there for the different modeling calculators has been updated or if the calculators ALL use older data?The most important data is that which you enter about your own situation. Did you have a particular concern about any of these four specifically recommended in the bogleheads post?
Also; just because I have not researched it yet does anyone have any "down and dirty" advice for a 401 vs a 457? Also; are you allowed to contribute to both? If yes can you contribute to max limits for each or is there a max cap across all plans?457 plans are treated separately from 401k/403b plans. You may contribute the maximum 457 amount to your 457 plan, plus the maximum 401k amount to your 401k plan.
I don't want to totally take this thread off topic but in setting up an HSA and now a 457 I have 3 different product vendors, is there a site or way to keep track of ETF's / products from each vendor to make sure you are not running into wash sale problems?It 's your thread, so.... :)