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Lisa

403(b) And 457 Combination?

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Good Morning,

 

I just found this board and am delighted that it exists! Both of my parents are college professors and I have been their erzatz advisor for years. I am currently employed by a financial advisor who works closely with teachers and administrators and we recently heard of a 403(b) plan that allows a participant to contribute funds one day and withdraw the next. It sounded like a combination of a 403(b) with a 457, but I can't find any information about this. Apparently ING is sniffing around some schools in our area with this product and one of our clients (an administrator) called to ask if we had heard of such a thing. Has anyone heard about this type of product? Or is it sales hype? Any thoughts would be appreciated!

 

Thank you,

 

LN

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Lisa,

 

Could you please expand a little on what you mean by "contribute funds one day and withdraw the next." If you are referring to the 90-24 feature of a 403(b), this has been around for awhile. If you are referring to actual withdrawals that are taxable than there is no such plan, withdrawals can only be made when a distributable event happens - such as death, disability, separation of services, age 59 1/2.

 

403(b) and 457(b) plans can be contributed to at the same time with separate limits. There is a chance that they are referring to a 401(a) plan, though there are no employee contributions into a 401(a), only employer.

 

Give us some more technical details.

 

ScottyD

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Hi All,

 

Thank you, ScottyD for your response! From the notes that I have about this the putting in and taking out of money is a possible distribution or rollover feature. Our client seemed to think that this product would enable a participant to put money into their 403(b), and then withdraw it without penalty. I am wondering if this might refer to the 90-24, though I am concerned that participants may not realize this is essentially an account transfer. Or it is a misinterpretation of the information provided. In the case of a participant being able to contribute to both a 403(b) and 457, other than hardship, is there ever a provision for withdrawal?

 

I hope this helps clarify a bit! Thank you so very much for your help!

Lisa

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Lisa,

I believe Scotty is probably on the right trail. Ing is pushing 401a's and the school districts are going for it big time. There's a movement afoot in our to make it mandatory for administrators to deposit unused sick leave annually. We're already doing it with terminal sick pay. Ask the client if it's funded with their unused sick days.

Roberta

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Thank you, Roberta! I will check on this. Do you or anyone have an opinion on the ING product? Or is it fairly new?

 

Thanks!

 

LIsa

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