***2022 updates included in description: A 457 retirement plan is a way for you to invest in your future by using tax benefits and compound interest. Some people refer to it as “Deferred comp” or “Deferred Compensation Plan”. It’s very similar to a 401k with a few small differences we’ll discuss in this video. As of 2022 you can contribute up to $20,500 into your 457 plan. If you are age 50+ you can do more, up to $26,000/year. You can choose to do either a Roth 457 or Traditional 457, or both (the total of both cannot exceed $19,500). Usually there is no match with a 457b because they typically supplement a pension plan. However, if your 457 does offer a match take full advantage of it, it’s free money! You’re allowed to combine a 457b with a IRA, 401k, or 403b. It is common to do a large amount in your 457b and max out a roth IRA as well ($6,000/year). One unique benefit to a 457b is you can withdraw the money as soon as you leave your employer, unlike a 401k where there is a 10% penalty. Any withdrawals from a traditional 457b will be taxed and any withdrawals from a roth 457b will be taxed unless you’re age 59.5+. A common question I get is can you borrow from your own 457 plan, typically yes but you will have to pay back the money plus interest. Also, you put yourself at risk that if you leave your employer and still owe a balance on the loan it will be due in full immediately.
To set up a 457b plan check with your HR or a co-worker to see which company your employer uses. Then go to that company’s website and register for an account. From there you can choose a dollar amount or percentage that you want withheld from your paycheck. As far as investing in your 457b plan, consult your financial advisor because I cannot give you financial advice. But if I was you I would look at all the funds offered and compare their 10 year rate or return. Then pick 2-3 funds that have a 10 year ROI of 11%+. Last tip, when you leave your employer you can roll over your 457 to an IRA. An IRA will have more investment options and specifically, a Roth IRA has some unique benefits. But if you do rollover your 457 then you will no longer be able to withdraw money penalty free before age 59.5.
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00:00 457b Explained
04:59 Withdrawing From a 457
08:13 How to Set Up a 457
08:52 457 Investing…(read more)
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How does a VangaurdTarget Retirement 2035 pay or earn?
Can you withdraw your whole amount ?
Do you have any information on a mixed 457b such as part pretax and part Roth. Is this something you would recommend?
What’s a reasonable fee amount for a 457b?
Which do you recommend between a Traditional 457b with no employer match vs a Roth ira. I am 27 and plan to retire at 49.
Thank you for this video. Very informative. I work for HUD and they offer a 401 (a) and 457 (b). I’m maxed out on the 401 (a) with employer match, and learning from you now about contributions for 457 (b). I’m happy to hear I can roll over the plans because I want to retire by 45 no older than 50. I’m 29 now.
I’m down over 12% just since January from this garbage administration. What should I do?
I'm glad I looked it up I'm 27 I just started working for the state of Texas we have a 401k an 457 program but there going to let go of th 457 program but we could still enroll in it even if it gets taken down. What would be my best option right now to enroll in an how much should I put in
I file married separate. Am I allowed to invest in a Roth 457b? I know there are limitations with other IRA’s depending on income. Thanks.
Sadly, I feel like I waited too long….I'm 44 and have been working at my employer for 8 years already and never contributed to the 457b…… Not sure if I can afford to put in the max to catch up, I don't earn a whole lot of money….I'm in a lousy position.
What are your thoughts on adding money to these accounts with how the market is looking
One of the only people I seen do a 457 video with great content
Thanks! I'm hearing a lot about expense ratios. And although I understand that they are important, but isn't the funds returns even more important. For example if a fund has 1% expense ratio and returns 15%, that's better that an expense ratio that has a .35% with a 12% return. Do you have any knowledge in this area?
Can you combine the 457b and 401k, likr the rollover with ira?
What is the rmd to 457
does the employer price match the 457. if not how do i find out
Is the 457 like a stock ? I got offered this plan in my job but idk if I should take this I already have a great 401k contribution
I'm a state employee and enrolled in a Roth 457b plan . What I've recently learned is that some 457 plans are "qualified or unqualified". Meaning, if your plan is qualified your retirement account is protected, but I your plan is "unqualified" and you're place of employment goes under you loose ALL of the money you invested into your own retirement account. This SCARES me, lol. Do you think this is a real risk? With the state of the world, I'm really concerned..
My account has been on a steady decline since January ………should I be concerned? Lots of videos out there warming us that there will be a crash. Have about 5-10more years to work. Sucks to watch it dwindle. -7.5%
Great vid
What would happen to the 457 if I left my employment early?
I have a 457 thru my job is it better to pick your own contributions or let the employer pick?
Thank you for the video and information. I currently work two full time jobs, both as a first responder/paramedic, one fire district I have a 457 I max out each year, I’m 42, and want to retire no later than 58-60yrs old, regardless. My question is, my other job, different fire district, I can do a 457 through New York State versus through a company like the other fire district I work for, should I do a second 457 with New York State or just take that money and invest it myself? Side note, I obviously also pay into New York State retirement, that being said I guess this would be a backup or third retirement account/investment. Thank you for any help/advice.
If i borough from my 457 plan, then retire the next year with a balance, can't the balance be paid off with what's Left on the plan?
Thanks, Tim. Hey question: If you calculate your retirement goal by taking your current salary and dividing by the percent you intend to withdraw, isn’t that only about half as much as you’ll really need since inflation will cut your buying power in half by the time you retire (assuming you’re in your 30’s)? So shouldn’t you go: Salary/.06*2? Thanks so much!
Do you have to stick with the company your employer has chosen for the 457?
Im 66 i still have money in my 457b..can i roll that money into an account to buy say Nvidia or Tesla without paying taxes?
Can I buy stocks with a 457 plan?
The 457 doesnt make sense to me as a state employee, as we already have 9% roundabouts withdrawn to go to pension. From what I saw, 457 and 401k have no contribution matching in that regard, so whats the big deal?? Why would I put my money into an account that doesn't compound or anything lol
Solid information
This is the final year I can contribute to the double 457 (39k) in California.
Thank you for your video very informative. Currently I’m contributing 26k yearly in my Roth 457 and I’m planing to contribute that amount for the next 10 years. I have 60% Large, 30% mid cap and 10% small cap. Since the company can’t give me any advice how to distribute my money what will be your opinion (is no advice ) if you were in my shoes. Should I continue with these distributions or look for others. I have a 401k with a fixed interest of 7% annually. Your help is greatly appreciated. Thank you!
I’ve got a Roth 457b and a Roth IRA I’m trying to figure out what to fully fund first after already maxing out my HSA
Good informations thx
I am thinking about retiring this April. I will be 65.5.
Tim, thanks for the informative video. I'm in public safety and have 9.125% of my salary withdrawn for pension. I also contribute an additional 6% towards my 457 plan, for a total of a little over 15% going towards retirement. Should I be contributing more to my 457 or could that additional money be better placed somewhere else? Thanks
Hi, first of all thank you for the great video. I am 54 yrs old and I just started working for the state of NJ. I have started putting 5% into my 457 but I do not know if I should invested moderated or aggressively since I plan to retire at 65 or 67. Thanks a lot for the advice!
I'm retiring in 5 years at the age of 49 which funds you recommend me to invest in
This is a much needed video for young people with 457b plans. Very good info.
Thank you so much! Very helpful.
Hey Tim thanks for the video I am contributing to a Roth457 b after tax but I don’t get your explanation when you said I will get tax again if I withdraw before 59-1/2 it doesn’t make sense to get taxed twice
Thank you for making this video!!! I just started a job as a state employee and this is all very new and overwhelming to an extent for me. My question is about investing. How does that work? I know you mentioned only drawing 6% out and also mentioned your 457 funds compounding over time. Do those investments help profit additional funds for your retirement? A video on that would be wonderful. TIA!
Thx for the video. I know you said you can withdraw once you leave employment. But let's say I'm leaving one job and going into another, can I withdraw from the prior jobs 457? Could I start a new 457 at my new employer?