Author Topic: Potentially dumb question about 403(B) plan  (Read 1648 times)

araminty

  • 5 O'Clock Shadow
  • *
  • Posts: 22
Potentially dumb question about 403(B) plan
« on: June 05, 2015, 04:25:38 PM »
Hi all. I've outlined my situation a bit in my journal thread, but something occurred to me that I have no idea how to find out the answer to. And then I remembered all you wonderful finance nerds (in the best way) and hoped you'd like to help me out.

I'm working for a university and contributing 70% of my salary to a 403(B) plan.  That's $940-ish twice per month. My employer doesn't make any matching contributions (boo!). The benefits website says: Employees may contribute up to $18,000 annually ($24,000 if age 50 or older at any time in the calendar year) in pretax dollars to both the 403(b) and the 457(b) plans.

My question is - um, is this OK? Is this the best way to be socking away pretax $? Should I additionally enroll in the 457(b) plan? The 70% contribution is the max allowed, and I only changed to it last month, so since Jan I've contributed around $5400.   Once I hit $18k for the year, I can manually remove the contribution. I think.

I'm also planning on resigning AT SOME NOT TOO DISTANT POINT in the future (the timing is uncertain) so it's possible this is all moot anyway :)

Thanks in advance for any advice.

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 5069
  • Age: 35
  • Location: Seattle, WA
    • My blog
Re: Potentially dumb question about 403(B) plan
« Reply #1 on: June 05, 2015, 05:06:17 PM »
You can withdraw from the 457 plan at any age with no early withdrawal penalty, so you might want to contribute there first if the fund options are reasonable.

Wilson Hall

  • Stubble
  • **
  • Posts: 163
Re: Potentially dumb question about 403(B) plan
« Reply #2 on: June 08, 2015, 06:45:58 PM »
You can withdraw from the 457 plan at any age with no early withdrawal penalty, so you might want to contribute there first if the fund options are reasonable.

Seconded. I am working at a job that I currently enjoy, but future long-term funding is uncertain. And, as many other posters have pointed out, once-enjoyable jobs can become less-so with a change in management. I've been contributing to a 403b since I accepted this position but opened a 457 last year just in case.

It's not a dumb question at all.

Zamboni

  • Magnum Stache
  • ******
  • Posts: 2507
Re: Potentially dumb question about 403(B) plan
« Reply #3 on: June 08, 2015, 07:41:41 PM »
I remember this not being spelled out very clearly by HR when I worked at a similar place, so not a silly question at all. What you are hearing from everyone is correct. 

You are in a lucky situation to have access to both plans. Most people to do not have access to both types. The 457 can be withdrawn at any age without penalty, so go there first since there is no incentive (aka employer match) to use the 403b.  Bear in mind that you do have to pay taxes if you decide to withdraw from the 457, so better to just sit on it as long as possible even though the withdrawals are penalty free.