What is a 457 Plan?
Learn about the 457 Plan, its unique benefits for public sector and non-profit employees, and how it can be a crucial part of your retirement planning strategy.
The 457 Plan is a tax-advantaged retirement savings plan primarily available to employees of state and local governments, and some non-profit organizations. Similar to the better-known 401(k) and 403(b) plans, the 457 Plan offers a way for employees to save for retirement while potentially reducing their current taxable income.
Key Features of the 457 Plan
One of the unique aspects of the 457 Plan is its penalty-free early withdrawal option. Unlike 401(k) or 403(b) plans, participants in a 457 Plan can withdraw funds when they leave their employer, regardless of their age, without incurring the typical 10% early withdrawal penalty. This feature makes it an appealing choice for those who might retire or change careers before the standard retirement age.
Another notable feature is the ‘double catch-up’ provision. As employees approach retirement, they may be allowed to contribute significantly higher amounts to accelerate their retirement savings. This is particularly advantageous for those who may have started saving for retirement later in their career.
Strategic Retirement Planning
For employees eligible for a 457 Plan, it can be a strategic component of a comprehensive retirement plan. Balancing contributions to a 457 Plan with other retirement accounts like a 401(k), IRA, or Roth IRA can optimize tax advantages and retirement savings growth.
Leveraging ProjectionLab for 457 Plan Strategies
ProjectionLab allows you to simulate different contribution levels, retirement ages, and investment strategies, helping you visualize the impact of a 457 Plan in your financial future. Start exploring your retirement options and fine-tune your strategy with ProjectionLab.
