The 457 plan is similar to the other kinds of retirement plans, except for the fact that it is catering to a different audience. A certain amount of their salary is set aside for this plan, and no tax needs to be paid on it until it’s they decide to withdraw. These plans are best rolled over and basically always rolled over to another 457 accounts. It just might be with a different insurance company like us.
When you do a 457 Rollover with us at Best Life, your new 457 account has a built-in floor. This means that you don’t have to worry about where the market is. You have a starting base and continue from there. In addition to that, your account increases with the market. So, when there are gains in the market, your account participates in these gains.
This is also true of the interest that is accumulated in this plan. As you make your contributions and the market gets better, you still have interest that is adding to your account. Many people like to hear this because they are getting much added into their account at the end of the day, and that means more money than they can withdraw when they retire.
Contribution and Rules
Like 401ks and 403Bs, participants can contribute to their 457 plans. The restrictions for this are a little different than the others, though. It is a little more lenient, and more can be added to it than others. The maximum contribution does change year to year, so you want to ask your insurance agent what the new contribution amount is every year.
Participants can contribute up to 100% of their salary if they would like, as long as it does not go past the maximum contribution limit.
Something that is kind of interesting about this plan is after the age of 50; the contribution amount increases by a couple of thousand dollars. This is a catch-up contribution for those who have not withdrawn yet.
In addition, you should be aware that there needs to be a withdraw from the account by the age of 72. It doesn’t need to be the whole amount, but at least the minimum needs to be withdrawn. This is just a rule that is there to make sure your money is not just sitting. It’s for retirement, so once you retire, you can be withdrawing from it. The minimum age to start withdrawing is 59 ½, like other plans.