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jebjebitz

457 question

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I recently asked the business administrator at my district about who our 457 provider was.  She said that any vendor plan could be used as a 457 plan we just needed to let them know we wanted to invest in a 457 instead of a 403b.  Does anyone know if Security Benefit DirectInvest can be used as a 457?

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I don't think NEA Direct Invest can be used for a 457, but you could ask Security Benefit and NEA Members Benefit. I remember you had Lincoln Investment's Participant Directed Platform before you changed to NEA Direct Invest. The former does both 403b and 457 plans.  

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6 hours ago, krow36 said:

I don't think NEA Direct Invest can be used for a 457, but you could ask Security Benefit and NEA Members Benefit. I remember you had Lincoln Investment's Participant Directed Platform before you changed to NEA Direct Invest. The former does both 403b and 457 plans.  

Thanks Krow.  Is the main benefit/difference between 457 and 403 that you have better access to your money in the 457?  I know for some, 457 options offer better investment options but, in this case I’d have access to the same funds.

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If you only have a need for 1 defined contribution plan, and you can choose between a 403b and a 457 plan that are equal, then I’d choose the 457 plan because of the no penalty on early distribution feature. For instance if the Lincoln Investment PDP (with both 403b and 457) was the only low-cost vendor available. I think Fidelity also offers both a 403b and a 457, with the same funds available and same fees.

Usually the fees and/or funds in the 2 available plans are unequal, which can make it easier to choose one or the other. Often the state 457 plan is much lower cost than any of the 403b plans on the district’s vendor list.

Another difference between a 403b and a 457 plan is with catchup contributions. They both have the catch-up contribution for those 50 or over, which is currently 6k.

The 457 has another catchup that can double the contribution during the 3 yrs prior to “normal retirement age”.  https://www.drs.wa.gov/dcp/investments.htm

403b plans has another catchup for employees with 15 years of service. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-403b-contribution-limits

Both the 457 and the 403b extra catchups use previous years’ contributions to calculate the amount of additional contribution. This means that good records are necessary. Plans don’t have to allow the catchups, although I think the age 50 catchup is usually allowed.

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