Author Topic: Roth 457 Withdrawal  (Read 1869 times)

king

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Roth 457 Withdrawal
« on: March 26, 2015, 09:19:54 PM »
As a mustachian newbie I'll take some advice on my wife's 457 plan.
She prefers the roth and I'm working on convincing her otherwise with information linked in this forum. My question is one major benefit of the 457 is no early withdrawal penalty at FIRE, but the Roth still requires tax on earnings prior to age 59.5? Given that, it makes the traditional an even simpler choice if we'll be paying taxes either way on withdrawals prior to age 59?

seattlecyclone

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Re: Roth 457 Withdrawal
« Reply #1 on: March 26, 2015, 09:54:19 PM »
I wasn't previously aware that 457 plans even had Roth options available. Apparently they can. Like traditional 457 plans, Roth 457 withdrawals have no early withdrawal penalty attached for withdrawing prior to age 59. However, you will owe income tax on any gains if you make withdrawals prior to age 59. Since you'll be paying tax on the gains either way if you withdraw early, why not wait on paying taxes on the principal as well?

king

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Re: Roth 457 Withdrawal
« Reply #2 on: March 27, 2015, 02:56:44 PM »
Thanks for confirming my understanding. Happy to  have the input.

bryan995

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Re: Roth 457 Withdrawal
« Reply #3 on: June 10, 2015, 12:01:28 PM »
Glad I found this post - I had the same question/suspicion.

I too have a 457b or Roth 457b available.
Given the goal of FIRE, the traditional 457b looks to be the best choice.

My current investment priority  list is:

$18k - max traditional 457b (me)
$5.5k - max roth ira (me)
$5.5k - max roth ira (wife)
$18k - max 403b (me)
$18k - max 401k (wife)
taxable

Happy to hear any feedback from others!

rudimentsofgruel

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Re: Roth 457 Withdrawal
« Reply #4 on: June 24, 2015, 06:22:41 PM »
It appears that, in addition to having separated from service, your Roth 457 would have to have been open for 5 years before you can access the principle tax-free.

Can anyone confirm or deny this?

Thanks!