UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next
Author: BruceCM Big red star, 1000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76111  
Subject: Re: Main differences between 401(a) and 457(b)? Date: 8/15/2014 11:40 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 8
czbill
Sounds like you will work for a government employer.

Sec. 401(a) is really not a retirement plan...its a set of rules that all qualified plans must follow. Governments do not offer ERISA-regulated qualified plans, but they often follow some of the rules outlined in Sec. 401(a). Generally, so-called 401(a) plans are contributed to by the employer, based on salary, years of service or some measure of the employer's profitability. They can be fixed annual contributions or may vary year to year. Government plans may require employee contributions, so these may not be elective to the government employee.

the 403(b) is the non-qualified version of the qualified 401(k) offered by private employers (note: with the exception of some grandfathered plans, governments may not offer 401(k) plans after May 1986). It may be offered by governments and non-profit employers.

There are two types of 457(b) plans: those offered by a government employer and those offered by a non-profit employer. For government employees, it generally will allow full 402(g) annual contributions (17,500 for 2014), generally does not include any employer contributions, and because it is technically a deferred comp plan, this contribution maximum may be in ADDITION to the 17,500 maximum contribution that may be made to a 403(b) or any other salary deferral plan the employee may have participated in for that year. Unlike other retirement plans (including traditional IRAs), there is no pre-59.5 10% early withdrawal penalty.

What is not to like about 457(b) plans is they are often expensive. They are often administered by insurance companies, who are masterful at extracting fees, fees and more fees...and because 457(b) plans do not fall under the recently added full fee and expense disclosure laws, these 457(b) fees are often very difficult to find. The negative effect of high fees can be substantial over one's working years.

BruceM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Deranged Monkey Criticism

Amazon: What Bezos Believes
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement