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What’s are the differences between a 403(B) and 457(B) retirement plan?
Posted on 1/25/21 at 8:57 pm
Posted on 1/25/21 at 8:57 pm
My wife started a new job this year and we are trying to figure out which is the best option.
What are the differences?
What are the differences?
5
Posted on 1/25/21 at 9:08 pm to GeauxTime9
One difference is that if and when you are no longer employed by that job, you can withdraw money early from 457b without the 10% penalty.
Posted on 1/25/21 at 9:09 pm to GeauxTime9
403 investment options tend to suck, but not always
457 investment options tend to be better than 403 options, but not always
Some of the catch-up rules are different between the two plans.
The main difference, or the one that tends to be the most meaningful IMO, is that 457 money can be taken without penalty prior to 59 1/2 if you retire from the employer. Note that this only applies to 457 and not Roth 457 contributions. 403 money, like a 401k or IRA etc. Has age requirements for taking distributions. 457 as far as I know is the only plan that lets you take distributions regardless of age.
457 investment options tend to be better than 403 options, but not always
Some of the catch-up rules are different between the two plans.
The main difference, or the one that tends to be the most meaningful IMO, is that 457 money can be taken without penalty prior to 59 1/2 if you retire from the employer. Note that this only applies to 457 and not Roth 457 contributions. 403 money, like a 401k or IRA etc. Has age requirements for taking distributions. 457 as far as I know is the only plan that lets you take distributions regardless of age.
Posted on 1/25/21 at 9:14 pm to GeauxTime9
Both are good ways to reduce taxable income. There might be differences between the plans (in investment choices) at her employer.
There can be make up contribution differences between the two with some individuals with 457s able to save significantly more. But the only difference which most people emphasize is the absence of penalties for early withdrawal for 457s (whereas those penalties affect money withdrawn before age 59.5 which was saved in 401k or 403b plans).
If your collective cash flow were adequate she could actually max out contributions to both plans at the same time.
There can be make up contribution differences between the two with some individuals with 457s able to save significantly more. But the only difference which most people emphasize is the absence of penalties for early withdrawal for 457s (whereas those penalties affect money withdrawn before age 59.5 which was saved in 401k or 403b plans).
If your collective cash flow were adequate she could actually max out contributions to both plans at the same time.
Posted on 1/25/21 at 9:22 pm to GeauxTime9
Assuming the match amount and the vesting schedule are the same, there aren't too many functional differences. 457b's allow for larger catch-up contributions to be made when you're nearing retirement age and withdrawals from
457b's will not have early withdrawal penalties assessed for cash distributions taken prior to 59 1/2. They should operate relatively similar otherwise.
Main thing I'd probably look at is the investment offerings for both plans. One may have access to some funds that the other doesn't, or that you just prefer.
It also may behoove you to check out in-service distribution options for both plans. Plans can choose to allow(or not allow) a couple of different in-service distribution options. If having some level of access to the funds pre-retirement is important to you, then you may want to check and see what distributions are allowed and factor that into your decision.
457b's will not have early withdrawal penalties assessed for cash distributions taken prior to 59 1/2. They should operate relatively similar otherwise.
Main thing I'd probably look at is the investment offerings for both plans. One may have access to some funds that the other doesn't, or that you just prefer.
It also may behoove you to check out in-service distribution options for both plans. Plans can choose to allow(or not allow) a couple of different in-service distribution options. If having some level of access to the funds pre-retirement is important to you, then you may want to check and see what distributions are allowed and factor that into your decision.
Posted on 1/25/21 at 9:32 pm to GeauxTime9
457 you can actually take out without penalty at 55. It’s mostly for teachers.
403b is almost exactly like a 401k.
I max both.
Most places allow that.
403b is almost exactly like a 401k.
I max both.
Most places allow that.
Posted on 1/25/21 at 10:45 pm to Huey Lewis
our 403 options are all Ishares
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