Author Topic: 457 plan questions!  (Read 2250 times)

MayDay

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457 plan questions!
« on: May 18, 2015, 02:00:41 PM »
I have been substitute teaching for the last 4 months.  I asked if I am able to contribute additional money to retirement accounts (10% + 14% match gets contributed to a 401k-like account) and was told no.  Yet today in the mail I got a letter indicating that actually I can use the state's 457 plan.  Conveniently, there is one week of school left. 

My plan for the fall is to figure out if I can defer all my income into the 457.  This may be difficult as my income is variable. 

My other question is this:  the plan documents seem to indicate that I can roll a tIRA balance into the 457 account.  This puzzles me.  Can I really roll over a chunk of money that was previously locked up until age 59, and now I can suddenly access it as soon as I quit teaching, with no penalty? 


forummm

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Re: 457 plan questions!
« Reply #1 on: May 18, 2015, 04:02:59 PM »
Some state employees have access to both a 403b and a 457b, and are allowed to contribute the max ($18k, or more for catch-up, on top of employer contributions) to both. You can see if this is possible for you. You should be able to contribute nearly all of your income (a small amount needs to come out for FICA taxes) to the two plans, if they are available to you.

I don't know specifically about your rollover question, but that sounds right. You can also access our tIRA balance without penalties at anytime you want (with a 5-year lead-in) through the Roth IRA pipeline. You can find many threads and websites on that. There's also the Substantially Equal Periodic Payments option, but that's more complicated.

MayDay

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Re: 457 plan questions!
« Reply #2 on: May 18, 2015, 04:15:36 PM »
I knew about both conversion methods, but the 457 appeals because it doesn't require any planning, I can just take money out whenever I need it.

There is also a 403b, but it appears to be through some kind of insurance salesperson.

Returnoftheyeti

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Re: 457 plan questions!
« Reply #3 on: May 18, 2015, 04:50:52 PM »
I knew about both conversion methods, but the 457 appeals because it doesn't require any planning, I can just take money out whenever I need it.

From what I understand:
You can take the money out IF you are past retirement age, if you leave your job, or if you are in financial hardship.  Not, "whenever you need it".

MayDay

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Re: 457 plan questions!
« Reply #4 on: May 18, 2015, 06:58:29 PM »
Yes, I understood the "if you leave your job " part. The goal would be to retire early and use 457 money until it runs out, then start tapping 401k/ira.

ruraljuror

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Re: 457 plan questions!
« Reply #5 on: May 18, 2015, 09:32:16 PM »
I believe you can roll other funds (tIRA) into the 457 but they will not be granted same benefits as your normal 457 contributions.

maizeman

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Re: 457 plan questions!
« Reply #6 on: May 18, 2015, 10:24:46 PM »
Our 457 plan can only accept rollovers from other 457 plans (not tIRAs, 401ks or 403bs). But we also have other weird restrictions (can't contribute the the 457 plan unless we're on course to max out the 403b plan for the year) which don't seem to be based on federal regulations, so this could be another of those.

jezebel

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Re: 457 plan questions!
« Reply #7 on: May 20, 2015, 08:19:41 AM »
Mayday, as a substitute teacher, how do you make contributions to the 457 in light of your irregular work days?  My husband has been substituting for a month and so far, through the end of the school year, his income is going into an IRA, which will be maxed quickly.   I know this probably varies by employer, but based on the info you have:

Can you allocate 100% of your wages directly to the 457 plan? And/or transfer contributions from your bank account?