457b Retirement Plans for Dummies

A 457 b is a tax advantaged retirement savings plan.

In some ways its pretty similar to the more common 401k plan or even TSP or 403b plans

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Eric Amzalag, CFP®, RICP®

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00:00 Intro
00:34 What is a 457b
01:00 How 457b Accounts Help You Save
03:08 Contribution Limits
05:48 Withdrawal Features
06:35 Are there ROTH 457b
06:55 Are you required to take RMDs from a 457?
07:11 How are distributions taxed?
07:59 Can you rollover a 457
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Disclaimer: Please consult with your own tax, legal and financial advisors for personalized advice.

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If you’re like most people, retirement planning may seem like a daunting task. But there’s an easy way to get started: a 457(b) retirement plan.

What is a 457(b) retirement plan, you ask? It’s a type of retirement account available to employees of state and local government agencies, as well as certain non-profit organizations. It’s similar to a 401(k) plan in that it allows you to save for retirement on a tax-deferred basis, meaning you won’t have to pay taxes on the money you contribute or earn until you withdraw it in retirement.

Here’s how it works: when you enroll in a 457(b) plan, you can choose to make contributions from your paycheck on a pre-tax basis, which lowers your taxable income and allows you to save more for the future. You can also choose to make after-tax contributions, which could potentially give you tax-free income in retirement.

One of the key advantages of a 457(b) plan is that you can contribute a larger amount of money than you can in a traditional 401(k) or IRA. In fact, the contribution limits for a 457(b) plan are higher than most other retirement accounts, allowing you to build a more substantial nest egg for your golden years.

Another benefit of a 457(b) plan is that you may be eligible to make catch-up contributions if you’re within three years of normal retirement age and haven’t maxed out your contributions in the past. This can be especially useful if you’re behind on your retirement savings and need to ramp up your efforts in the final years of your career.

Of course, like any retirement plan, there are rules and regulations that govern how you can use the money in your 457(b) account. Typically, you can’t withdraw funds from a 457(b) plan before age 59 ½ without incurring a penalty, although there are some exceptions for specific financial hardships. Once you reach retirement age, you can start taking distributions from your 457(b) plan to support yourself in your post-work life.

If you’re still feeling overwhelmed by the idea of retirement planning, don’t worry. Most 457(b) plans offer access to professional financial advisors who can help you navigate the ins and outs of the program and create a personalized retirement strategy that fits your needs.

In conclusion, a 457(b) retirement plan is a powerful tool for building a secure financial future. By taking advantage of the benefits it offers, you can work towards a comfortable retirement and enjoy the peace of mind that comes with knowing you’ve made smart choices for your financial well-being. So don’t be intimidated by the process – start investigating your options today and take the first step towards securing your retirement.