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cguinta1

403B And 457?

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The school district I work for has the options for teachers to contribute to a 403b and 457b. I currently contribute about $7,000.00 per year to my 403b as that is all i can afford. We have been urged to open a 457 as well even if we do not contribute to it. Is there a reason to open a 457 even if I don't max my contribution to the 403b? What are the benefits of opening a 403b and 457 as well?

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Guest Joel L Frank

The school district I work for has the options for teachers to contribute to a 403b and 457b. I currently contribute about $7,000.00 per year to my 403b as that is all i can afford. We have been urged to open a 457 as well even if we do not contribute to it. Is there a reason to open a 457 even if I don't max my contribution to the 403b? What are the benefits of opening a 403b and 457 as well?

 

 

Some states have a 457 plan open to ALL public workers in that state including k-12 personnel. Are you in one of those states; i.e. New York? If your 457(b) plan offers a de minimus cost provider like the Vanguard, which you are using for your 403(b) then you and your employer have hit a home run. If you have not turned age 59 1/2 I would suggest you max out your 457(b) prior to investing in a 403(b) because the 10 percent federal excise tax does not apply to pre-age 59 1/2 withdrawals from a 457(b).

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The school district I work for has the options for teachers to contribute to a 403b and 457b. I currently contribute about $7,000.00 per year to my 403b as that is all i can afford. We have been urged to open a 457 as well even if we do not contribute to it. Is there a reason to open a 457 even if I don't max my contribution to the 403b? What are the benefits of opening a 403b and 457 as well?

 

 

Some states have a 457 plan open to ALL public workers in that state including k-12 personnel. Are you in one of those states; i.e. New York? If your 457(b) plan offers a de minimus cost provider like the Vanguard, which you are using for your 403(b) then you and your employer have hit a home run. If you have not turned age 59 1/2 I would suggest you max out your 457(b) prior to investing in a 403(b) because the 10 percent federal excise tax does not apply to pre-age 59 1/2 withdrawals from a 457(b).

 

 

Hi Joel,

 

I work in New Jersey in a high school district. Our 457 options are quite limited. We only have three and none are on Vanguard's level. Our options include MetLife, Oldham Resource Group, and Legend Group. That's it!

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My advice is that a 457 and a 403 are a means to the same end. Pick your lowest cost choice. I have a very very low cost 457 plan available to me so I stopped the 403b and went with the 457 even though its not with Vangurd. Its with Blackrock. It doesn't matter to me though because I have Blackrock index funds available that are actually cheaper than Vanguard in some instances. Always go with the lowest cost-always always always!!!! If you have poor choices do the roth IRA first and extra money goes in the 403b or 457.

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Guest Joel L Frank

The school district I work for has the options for teachers to contribute to a 403b and 457b. I currently contribute about $7,000.00 per year to my 403b as that is all i can afford. We have been urged to open a 457 as well even if we do not contribute to it. Is there a reason to open a 457 even if I don't max my contribution to the 403b? What are the benefits of opening a 403b and 457 as well?

 

 

As an individual you do not need both inasmuch as you fund your 403(b) with $7000. Have you read my: 457(b) Heist in New Jersey?

 

Joel

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