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jarhead

Question To Sierra Or Others

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The State of New York's 457 Plan is available to all local public employers, including school districts, in the State. The Plan is one of the finest in the nation.

 

Having a choice between 457 plan and Fidelity (possibly Vanguard), why would a 457 Deferred Compensation Plan be a better choice?

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Guest Sierra

The State of New York's 457 Plan is available to all local public employers, including school districts, in the State. The Plan is one of the finest in the nation.

 

Having a choice between 457 plan and Fidelity (possibly Vanguard), why would a 457 Deferred Compensation Plan be a better choice?

 

Because the Fidelity Funds are on the investment menu and more importantly the 10 percent federal excise tax does not apply to 457(b) plans.

 

Peace and hope,

Joel L. Frank

Pension Columnist

The Chief-Civil Service Leader

277 Broadway

New York, NY 10007

 

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Because the Fidelity Funds are on the investment menu and more importantly the 10 percent federal excise tax does not apply to 457(b) plans.

Joel,

Yes, Fidelity Freedom Funds are offered on the New York State's 457 plan. Too bad, other than the Vanguard Total Bond Index Fund, there are no other decent index funds to choose from.

 

About the 10% federal excise tax... is it charged if you take the money out early, before the age of 59 ½?

 

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Guest Sierra

Because the Fidelity Funds are on the investment menu and more importantly the 10 percent federal excise tax does not apply to 457(b) plans.

Joel,

Yes, Fidelity Freedom Funds are offered on the New York State's 457 plan. Too bad, other than the Vanguard Total Bond Index Fund, there are no other decent index funds to choose from.

 

About the 10% federal excise tax... is it charged if you take the money out early, before the age of 59 ½?

 

Hi Jar,

 

Regardless of age or employment status all withdrawals are exempt from the 10 percent tax. This makes it, in my mind's eye, the plan of choice for those who qualify to participate. It is the best kept secret in New York State. I am outraged, as I'm sure all teachers in the state are, that the NYSUT has kept this a military secret for all the dacades that it has been available to the state's public school employees. As in my home state of NJ the union's silence has made the high priced 403b variable annuity/mutual fund king and queen among NY Teachers.

 

Now that Spitzer has extinguished the ING/NYSUT illegal partnership with an order to NYSUT to make sure all teachers are aware of lower cost alternatives maybe the union will soon endorse the 457 plan to the same degree as it endorses the Defined Benefit State TRS. Can any other two endorsements be more logical and more essential to the financial futures of the state's public school employees and their families?

 

Or is NYSUT looking for yet another partner to take the place of ING? The Union's plans are not known. Jar, you need to stand up and be counted--- tell your NYSUT (you pay for their operation) to get involved with the 457 Plan. A request for Vanguard funds may very well be in the cards if you DEMAND it from your state union.

 

Peace and Hope,

Joel L. Frank

Pension Columnist

The Chief-Civil Service Leader

277 Broadway

New York, NY 10007

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