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Polo73

Same Old Question 457 Vs Roth

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Hello all,

 

I am at a crossroads and need help. My wife has an available Tax defered 457 plan, I have a 401k. The consensus seems to be that we should first max out my 401k to the point of company match (7% in my case). After this point opinioins differ;

 

Option 1- Continue to max out my 401k till I hit the 15k

 

Option 2-After the 401k 7% match is maxed then switch to a Roth till maxed then back to the 401k till 15k is met.

 

Option 3-401k till 15k, then 457 till 15k to take advantage of the tax-defered nature of the 457. Then the Roth.

 

I am unsure how much impact the 457's tax deferral will help....I still get taxed at the end...and the fact that they are soaking up 2.5-3% in loads/admin fees gets me steamed. I'm not sure which option pays more. The Roth where I get taxed now (25%) and enjoy tax free withdrawls later (not to mention .2-.3% admin fees) -or- The 457 with its "tax me later compounding" status and 2-3% fees.

 

I need a new caclulator!!!! ( I guess this is why those guys in the monkey suits get paid)

 

Thanks for any help!

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Guest Sierra

Hello all,

 

I am at a crossroads and need help. My wife has an available Tax defered 457 plan, I have a 401k. The consensus seems to be that we should first max out my 401k to the point of company match (7% in my case). After this point opinioins differ;

 

Option 1- Continue to max out my 401k till I hit the 15k

 

Option 2-After the 401k 7% match is maxed then switch to a Roth till maxed then back to the 401k till 15k is met.

 

Option 3-401k till 15k, then 457 till 15k to take advantage of the tax-defered nature of the 457. Then the Roth.

 

I am unsure how much impact the 457's tax deferral will help....I still get taxed at the end...and the fact that they are soaking up 2.5-3% in loads/admin fees gets me steamed. I'm not sure which option pays more. The Roth where I get taxed now (25%) and enjoy tax free withdrawls later (not to mention .2-.3% admin fees) -or- The 457 with its "tax me later compounding" status and 2-3% fees.

 

I need a new caclulator!!!! ( I guess this is why those guys in the monkey suits get paid)

 

Thanks for any help!

 

 

Does your wife work for a state/local government? Those are fees a shark loves. Is your Roth a Roth 401(k) or Roth IRA? What are your ages?

 

Joel

 

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Does your wife work for a state/local government? Those are fees a shark loves. Is your Roth a Roth 401(k) or Roth IRA? What are your ages?

 

Joel

 

 

 

Yes she works for the county so the variable annuity is tax defered at the onset. As of right now there is no Roth, Just my company 401k. We are both 32.

 

Yes the fees stink, and not just the regular kind of stink either...it's the kind of stink that lingers for a long time. I keep thinking that more and more that a Roth IRA is the next logical choice after my company 401k (but ahead of the tax defered annuity)...but at what time? After my company match is exhausted (7%) or after the 15k maximum contribution.

 

Thanks again.

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Guest Sierra

 

Does your wife work for a state/local government? Those are fees a shark loves. Is your Roth a Roth 401(k) or Roth IRA? What are your ages?

 

Joel

 

 

 

Yes she works for the county so the variable annuity is tax defered at the onset. As of right now there is no Roth, Just my company 401k. We are both 32.

 

Yes the fees stink, and not just the regular kind of stink either...it's the kind of stink that lingers for a long time. I keep thinking that more and more that a Roth IRA is the next logical choice after my company 401k (but ahead of the tax defered annuity)...but at what time? After my company match is exhausted (7%) or after the 15k maximum contribution.

 

Thanks again.

 

Don't put a dime in the shark infested 457(b) variable annuity. At your ages I would max out a Roth IRA and contribute the max to the 401(k). Have you asked the county government why they do not offer mutual funds as an alternative investment vehicle for the 457(b) Plan?

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Don't put a dime in the shark infested 457(b) variable annuity. At your ages I would max out a Roth IRA and contribute the max to the 401(k). Have you asked the county government why they do not offer mutual funds as an alternative investment vehicle for the 457(b) Plan?

 

 

It is a small town (County seat) geriatric medical care facility; chances are that they were duped into the 457 by the agency that handles their defined benefit plan. If it were my place of work, I would be beating the drum. As it is my wife is a well paid hourly staff therapist, it would probably be difficult to change the way the adiministration thinks currently...plus she has displayed retisence towards informing herself of the positives and negatives of any given retirement vehicle.

 

Thank you again for the opinions...Vanguard will be getting a call before April 17th (the last day to contribute towards a Roth and have it count towards 2005).

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Now the latest question is what is best in the long run....Total income is in the 72k range....do we do a partial (and partialy deductible) traditional IRA or a full contribution to the Roth? I need to take some CPA classes.

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