I’ve been finalizing our budget for the upcoming year. Included is determining how much to contribute to our various retirement accounts. My husband works for a university, so he has two plans available to him: the 457 and the 403b.
Double Contribution
Did you know that the elective deferral limits are for each plan? You can contribute the maximum to both plans, effectively deferring double the amount that is usually allowed for private sector employees through a 401k.
457 Advantage
When you can’t fully fund both plans, there’s a great benefit to a government 457 plan. There is no early withdrawal penalty! The standard 10% withdrawal penalty for using funds before age 59 1/2 doesn’t exist. It’s also important not to roll 457 money into another plan to preserve this benefit.
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