Author Topic: Gov. 457b - Jackpot!  (Read 4392 times)

gripped

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Gov. 457b - Jackpot!
« on: December 20, 2013, 06:06:09 PM »
I recently switched jobs from the private sector to a very similar paying job with a public agency. The other day we had an optional meeting to talk to a rep about a 457b plan, which my HR rep described as basically a 401k.

After doing a little bit of research and going to the meeting, I realized that a 457b is about as mustachian as it gets and I accidentally walked into a jackpot! If you aren't familiar, it is a pre-tax plan that has no penalties for withdrawal after you leave service. Withdrawal is taxed like normal income, but I think I'm not unique on these boards in saying that I will likely withdraw in about 2 brackets lower than my current income tax.

All this being said, I think that you sort of have to be in the right place to take advantage of these plans. But if you are considering a government job, do some research on the governmental 457b!

TheDude

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Re: Gov. 457b - Jackpot!
« Reply #1 on: December 20, 2013, 08:43:48 PM »
Yeah if you get a good plan provider they can be pretty sweet. My wife works for a charter school and I think they are finally getting one in 2014. I've been asking for the last year and  a half.

shamelessHedon

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Re: Gov. 457b - Jackpot!
« Reply #2 on: December 20, 2013, 09:02:44 PM »
I had the spouse check last week. Not eligible. :(

arebelspy

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Re: Gov. 457b - Jackpot!
« Reply #3 on: December 20, 2013, 09:06:31 PM »
Yup.  I'm a huge fan, we max ours out.

One caveat is if your employer may go bankrupt, it's risky (such as a non-profit hospital) since it's in their name and is seen as deferred compensation, rather than retirement savings.  Not nearly as much of a risk with a government one.
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Honest Abe

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Re: Gov. 457b - Jackpot!
« Reply #4 on: December 21, 2013, 06:45:41 AM »
http://www.millionaireeducator.com/2013/03/how-we-saved-250000-by-taking-crappy.html

Check this guy out... He really knows how to make the most of his 457s

Rollin

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Re: Gov. 457b - Jackpot!
« Reply #5 on: December 23, 2013, 01:43:23 PM »
Been in mine for almost 30 years.  Only drawback are limited funds that have low fees.  Otherwise, it has allowed me to save a significant amount of money, much more than double today due to interest earnings than what I have put in - and that is after the last big drop during 08-09 (as well as one in the 90's).  Overall my yearly percentage increase has been modest, but the way I look at it is I had more money to put in there in the first place (since it was pre-tax it amounted to more available) and it has accrued interest free.  I am planning on retiring early and this no penalty withdrawl may help me if I decide I need it early.  I'll likely take it out and invest in an IRA (roll-over) though.

aj_yooper

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Re: Gov. 457b - Jackpot!
« Reply #6 on: December 24, 2013, 01:32:19 PM »
Yup.  I'm a huge fan, we max ours out.

One caveat is if your employer may go bankrupt, it's risky (such as a non-profit hospital) since it's in their name and is seen as deferred compensation, rather than retirement savings.  Not nearly as much of a risk with a government one.

In some states too, the state never taxes the money when you take it out in retirement.

arebelspy

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Re: Gov. 457b - Jackpot!
« Reply #7 on: December 24, 2013, 02:22:35 PM »
Yup.  I'm a huge fan, we max ours out.

One caveat is if your employer may go bankrupt, it's risky (such as a non-profit hospital) since it's in their name and is seen as deferred compensation, rather than retirement savings.  Not nearly as much of a risk with a government one.

In some states too, the state never taxes the money when you take it out in retirement.

Interesting.  It's a specific exemption in their income tax code?  My state has no income tax anyways, but interesting that some states that do have a personal income tax exclude withdrawals from 457s...
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

CommonCents

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Re: Gov. 457b - Jackpot!
« Reply #8 on: December 26, 2013, 10:01:16 AM »
Been in mine for almost 30 years.  Only drawback are limited funds that have low fees.  Otherwise, it has allowed me to save a significant amount of money, much more than double today due to interest earnings than what I have put in - and that is after the last big drop during 08-09 (as well as one in the 90's).  Overall my yearly percentage increase has been modest, but the way I look at it is I had more money to put in there in the first place (since it was pre-tax it amounted to more available) and it has accrued interest free.  I am planning on retiring early and this no penalty withdrawl may help me if I decide I need it early.  I'll likely take it out and invest in an IRA (roll-over) though.

Mine lets you sign up for a brokerage account with another firm and send your money to it.  They require you keep a minimum of $1000 with them.  This expands my limited fund options (they have a ton of target retirement ones, but give you little information about those funds).

Fireman

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Re: Gov. 457b - Jackpot!
« Reply #9 on: December 27, 2013, 08:24:21 AM »
+1  I only wish i'd started contributing sooner!