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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75897  
Subject: Re: Retirement Contributions to 457 Plan Date: 6/8/2007 3:05 PM
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Assuming you are speaking of your principal residence, probably not, for a couple of reasons.

1. I've never seen a 457 plan I'd recommend, with the exception of the Oregon Income plan for State Employees. Most 457 plans are administered by insurance companies, that usually carry multiple annual expenses and fees and often restrict post retirement withdrawals. Now, this is not universal, and there may be well managed, low expense Govt 457 plans out there. But it doesn't make much sense to diligently fund a tax deferred plan that will consume most of your future earnings and tax-deferral benefits in expenses and restrictions.

2. Home equity is a locked-up asset that can only be released when you downsize or die. You can certainly borrow against it, but this can be costly and produces a liability that must be repaid, thus is a net expense. The effect of this would be to further reduce the net earnings of your 457 plan contributions.

Assunming you are fully funding your TIRA/Roth IRA for you and your spouse, and assuming you have no other options for pre-tax contributions through your employer(s), you might consider using the discipline you are alluding to and fund a taxable account of tax efficient ETF's. This way, you have full control, minimal expenses, tax deferral on growth and lower cpaital gains tax rates upon future withdrawal. The trade-off is that this amount will not be protected from creditors, but this would be the risk you'd need to be willing to take.

BruceM
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