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In the absence of an employer match in either plan and given that after you leave the employer sponsoring the plan you may take a distribution from the 457 plan before age 59 1/2 without having to worry about paying an early withdrawal penalty, my inclination is to go with that plan over the 401(k). That's especially true if the investment options are better in the 457 plan than in the 401(k).

Pixy, thanks for your response. I have read the materials and looks at websites for information on the 401k and 457 plans. When I ask for disadvantages between the plans, what I am asking for are the little details many people fail to ask about. Specifically, are there any legal protections (i.e. bankrupcy, divorce, legal judgements) that make one plan better than the other?

The decision is yours, but if the investment options are better in the 457 plan and if that plan accepts a transfer from the 401(k), then why would you prefer leaving the money in the 401(k)? Seems to me you would wish to put your money where it has the best chances of growth, no?

I misspoke. The 457 plans have more investment options than the 401k. Both have index funds, bond funds, large cap, mid cap, small cap, value, and international funds. The 457 plans just have more choices for each type of fund. The 457 has over 22 choices versus 8 choices for the 401k. Also, you can invest in other funds if you directly make a request of the 457 administrator. Yes, more choices don't mean better choices. I have more research to do.


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