Episode 1301
Are you a teacher, a non-profit employee, or a public servant? In this episode, we decode the specific retirement savings plans designed for you. We begin by exploring the 403(b), a tax-advantaged plan for public education, ministers, and 501(c)(3) organizations that functions similarly to a 401(k). We discuss its evolution from strict "tax-sheltered annuities" to plans that now allow investment in mutual funds, as well as the addition of Roth (after-tax) contribution options in 2006.
Next, we unlock the power of the 457 plan, a deferred-compensation tool for government and select non-government employers. We highlight the massive advantage this plan offers over the 401(k): there is generally no 10% penalty for withdrawals made before age 59½. We also explain a unique strategy for high earners—the ability to double your savings by contributing the maximum limit to both a 457 plan and a 403(b) or 401(k) in the same year.
Finally, we cover the fine print you can't afford to miss, including:
• Special Catch-Up Provisions: How you might be eligible to contribute even more during the three years prior to retirement.
• Security Risks: Why assets in non-governmental 457 plans technically remain the property of the employer and are not set aside in a trust for the employee.
• Bankruptcy Protections: How federal laws changed in 2005 to better protect 403(b) assets from creditors.
Published on 1 day, 1 hour ago
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