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walthomc

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  1. walthomc

    457b

    I believe you can take whatever amount you want as long as you have separated from service, and retirement qualifies as such a separation. Distributions get no special treatment with regard to taxes, they get taxed at earned income rates. YOU are in charge of doing your own tax planning and avoiding "bracket creep".
  2. The decision to invest in a diversified portfolio vs. "staying in cash" was absolutely worth it. I'm not a timer. It is a big spread from a 5% cash portfolio to 9.8% on my wife's 403b. Apply the Rule of 72 and you will see how much longer 5% money takes to double vs. long-term diversified portfolio returns. Yes my 7.9 on my 457 didn't "shoot out the lights". But vs. 5.5% for S&P 500 and 11.2 for EAFE, I'm happy . And my portfolio volatiltiy was nearly 1/3 less due to infusion of bond funds. Last year(2006) my portfolio returns were just under 14%. Yes, 2007 was not a super year for most equities and 2008 may even be tougher, but I'm gonna be there dollar cost averaging in. Cash @ 5%might be harder to find in future w/ trend toward lower rates in 2008. Also, how did Harvard U. get nearly 35 billion in their endowment? Certainly it was not by being in cash. Diversified porfolios , hiring good management and oh yeah, having some index funds got them there.
  3. Watch out for annual plan expenses and fees. Also look at fund expense ratios, compare to industry norms. Bottom line: index funds have lower expense ratios than actively managed funds. But some active funds really justify their their expenses thru superior returns. Extreme Example: CGM Focus, Kenneth Heebner knows his stuff and posts results to prove it. On the opposite side, Johnathan Bogle(Vanguard fame) is the godfather of indexing, loves it. S&P 500 numbers for past 10 years(averge annualized) have been tough. My bias is for active management(by human beings) I have however had superior returns from funds that used quantitative analysis (computer driven buying and selling). Quant funds are tough to find . Reserve them for your ROTH after you do some exploring. Asset allocation will be key to your success. It's a complicated topic too long for this reply. Check it out. And oh yeah, w/ small kids you need plenty of inexpensive Level Premium Term Insurance. A long time ago I learned the expression" buy term and invest the difference". I have followed this and been very succesful. Good luck!
  4. No state taxes if one relocates to a state w/o a State Income Tax and takes distributions after establishing residency in that locale. 13 states in US have no income tax, I believe.
  5. How old are you and you're wife? An advantage of 457 plan is distributions can be obtained if you "separate from service". No age 59.5 criteria like 403b. I have done 457, my wife 403b, and Roth IRA's. I am disabled, and right now easy acces to tax free Roth assets is saving me. I have 2 kids in college (expensive schools). My advice, pile up as much as you can in multiple plans( I love Roths, wish I did more). Having too much $ is a great problem. Right now even w/ market lows I have a total of about $700,000. Study" Rule of 72", google it. Time is your ally, try and get 8-10% returns over long term,my 457 got 7.9%, wife's 403b 9.8% in 2007. Both portfolios are 68% stock funds, 32% bond funds. I am age 57, wife 55. I am a fan of actively managed funds, don't own any indexes. Study managers and their performance. Don't panic when market is down. I get several publications. Strongly suggest: Morningstar Fundinvestor, Eric Kobren's Fideity Insight. These are very helpful. Yes, they are expensive, but they pay me back wonderfully, AND they are a deduction(investment publications) on taxes(long form). Best wishes
  6. The rules contemplate payment of sick leave after severance. Specifically, the general definition of compensation includes "Payment for unused accrued bona fide sick, vacation, or other leave, but only if the employee would have been able to use the leave if employment had continued" where the sick leave is paid after severance. Have you applied for disability from our employer or Social Security? If your employer has a pension plan, have you applied for its disability benefits? Certainly if you meet the Social Security definition, the sick leave should be treatable as post-severance. The determination of sick leave eligibility omits any determination that your condition is permanent, so it's probably not good enough. It is possible that a statement from your employer that you won't be coming back to work and a doctor's opinion are enough, depending on how tightly the plan is administered. You should consider whether you want to raise this argument. You may adversely affect your benefits under the retirement plan you are avoiding. Whether you will or not depends on the specific language of that plan. Generally, the issue would be whether it can treat you as retired on your facts and, if so, whether you can nonetheless defer commencement. But the devil can be very much in the details and the actual wording is critical. As an aside, can the 457 plan simplify your process for unforeseeable emergency? For example, apparently they are satisfied on foreseeability, the medical basis for requests and nonavailability of other resources. Would they streamline the process to require simply a "no changes" statement on those issues? Tom Geer The rules contemplate payment of sick leave after severance. Specifically, the general definition of compensation includes "Payment for unused accrued bona fide sick, vacation, or other leave, but only if the employee would have been able to use the leave if employment had continued" where the sick leave is paid after severance. Have you applied for disability from our employer or Social Security? If your employer has a pension plan, have you applied for its disability benefits? Certainly if you meet the Social Security definition, the sick leave should be treatable as post-severance. The determination of sick leave eligibility omits any determination that your condition is permanent, so it's probably not good enough. It is possible that a statement from your employer that you won't be coming back to work and a doctor's opinion are enough, depending on how tightly the plan is administered. You should consider whether you want to raise this argument. You may adversely affect your benefits under the retirement plan you are avoiding. Whether you will or not depends on the specific language of that plan. Generally, the issue would be whether it can treat you as retired on your facts and, if so, whether you can nonetheless defer commencement. But the devil can be very much in the details and the actual wording is critical. As an aside, can the 457 plan simplify your process for unforeseeable emergency? For example, apparently they are satisfied on foreseeability, the medical basis for requests and nonavailability of other resources. Would they streamline the process to require simply a "no changes" statement on those issues? Tom Geer
  7. I have 300,00 in 457, I am age 56, have ALS( Lou Gehrig's disease). Yes , I know I can request emergency withdrawals via a 7 page application for medical reasons. Frankly ,I don't and will never have 300,000 worth of medical expenses. I have great medical insurance. I am seeking unfettered access to my account. Key issue is that I am still on payroll( will be using 2 years of sick-leave) and have not technically SEPARATED FROM SERVICE. I startd my sick leave 11-5-07. Yes, if I retire, I will have access to my 457. My family will be better off in terms of survivor benefits if I remain on sick leave and retire in several years(if I live that long). KEY QUESTION: Any ideas on getting access ? I have learned it is much easier to get access to my ROTH IRA assets, than the 457, just get declared totally and permanent disabled. Thank you.
  8. You can do a "trustee to trustee" trasfer of your 457 to a custodian that has better funds. There are no taxable consequences from such a transfer as long as you do not take possession. Beware of surrender charges from the Annuity Co. that presently has your account. See if there is a date in the future when surrender charges get reduced due to the attainment of a certain time frame or holding period imposed by the Annuity Co. I have done two such transfers for family members and they have done much better on their own with my assistance.
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