Jump to content
Eric

457(b) Basic Questions

Recommended Posts

Hi

 

I am on a learning curve regarding the 457(b) plan. Consequently I have some basic, but important questions. I wish to open a 457(b) and max it out. My choices are Fidelity and TIAA CREF. I will probably go with the former. I wish to build this up over the next year or two with the aim of rolling it over to an established Traditional IRA then pay the taxes to get into my Roth IRA. This would occur once I terminate employment. My questions are:

 

(1) Someone at Fidelity told me that a 403(b) has to be maxed out before contributions to a 457(b) can be made. However, it was not clear to him if one needs to first contribute this amount to a 403(b) (i.e. $14,000 for 2005) before starting contributions to a 457(b), or if contributions can be made concomitantly such that by year's end the 403(b) hits $14,000? Is either of these accurate?

 

(2) Upon leaving current employer can a 457(b) rollover into a Traditional IRA, or alternatively can one receive as cash with NO PENALTY regardless of age (of course I understand I must pay taxes if I receive as cash)?

 

Thanks for any comments.

 

Eric

 

 

Share this post


Link to post
Share on other sites

The information you received regarding contributions is incorrect. You are not required to maximize contributions to a 403(b) before you are allowed to participate in a 457, or vice-versa. You may contribute to either one, or both, up to the maximum permitted for each plan.

 

Assuming you work for a governmental employer, distributions from a 457 plan upon severance of your employment may be rolled into a traditional IRA without tax penalty. However, if your employer is a non-governmental entity, rollovers are not allowed.

 

I hope this is of benefit to you.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

×
×
  • Create New...