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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Zamboni on September 30, 2013, 06:53:41 PM

Title: 457 Plan
Post by: Zamboni on September 30, 2013, 06:53:41 PM
Last week I found out BY ACCIDENT that my employer offers a 457 plan.  This is not advertised anywhere, it's not on the benefits site anywhere even when one uses the search function looking for it, and it definitely wasn't brought up at the benefits overview.

So today I call HR and ask, and the lady answering the phone says "Yes we have a 457 plan but you have to be maxing out the 403b plan first."  Um, HELLO, I am doing that!  Why in the heck don't they tell people about this?  Do I have to be in a certain income bracket for them to even be bothered informing me of all of the available benefits?  Because I even proactively LOOKED through all of the benefit website trying to find information about it when I first joined the company several years ago because my previous employer had a 457 option.  I even scheduled a special one-on-one retirement planning session with my employer to ask about where else I could be saving, and it wasn't mentioned then although he did suggest opening a 529.  He did say it didn't look like I need to put anymore toward retirement, so maybe he just didn't think I'd be interested enough to even know about it.  Man, I am triple miffed! 

Anyway, tomorrow the guy who handles the 457 enrollments is supposed to call me back, and I'm going to give him the third degree about why this is the freaking magical mystery benefit.  And then I'll probably be doing some research figuring out how to invest in whatever options they offer in this plan (unless it's with Vanguard, in which case I'm all set with fund already.)

Okay /rant.
Title: Re: 457 Plan
Post by: LowER on September 30, 2013, 07:37:00 PM
I think there is an income threshold for investing in a 457 but don't know what that is, or if it's static.  I've never heard that maximizing the 403/401 has ever been a criterion for investing in a 457 - I would guess that is not correct.  If you work for a governmental agency, the 457 is awesome, for many reasons especially early retirement because you can withdraw early without penalty, after you've left your job.  If not a government job, and your employer goes under, you lose everything without recourse.  I am in the latter group and am gambling in hopes of the best.

If government, it's a great idea.  If not, I think it's a roll of the dice. 
Title: Re: 457 Plan
Post by: Zamboni on October 01, 2013, 09:15:16 AM
There was no income threshold for investing in a 457 when I worked for the state.  However, this morning I was told that I am not eligible due to my income, which is - get this - much greater than the average income in this area but still less than HALF what they require for eligibility.  So basically this is a perk for the ultra-highly compensated executives here.  Seriously.
Title: Re: 457 Plan
Post by: arebelspy on October 02, 2013, 12:25:16 AM
Well, you found out why they don't advertise that perk.
Title: Re: 457 Plan
Post by: Zamboni on October 02, 2013, 08:19:54 PM
Actually it gets even better:  the HR guy kept saying it's part of the "top hat program."  He said "top hat" at least 6 times while on the phone with me.  He honestly couldn't imagine why I want to save more than I do.  Um, can you say "tax deferred investment growth?"  So now at least I have new lingo to mock.

Thing is, we had the same type of plan when I taught for the state.  I made less than half of what I make now and was eligible, so I contributed.  But my current employer is definitely a "rich get richer while the poor get poorer" kind of place in the extreme.
Title: Re: 457 Plan
Post by: RootofGood on October 02, 2013, 08:28:10 PM
I had a 401k and 457 while employed with my state.  I wasn't aware of any income limits at all. 

Great way to dump $35k/yr into tax deferred savings (you get to use up the full $17.5k in each program which defies logic). 

Our 401k and 457 plans were identical in terms of investment choices offered. 

Oh yeah, and I wasn't a top hat.  The upper crust at my crusty old employer made double what I was making and I was paid relatively well for a state job.