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Second Job 403 vs 457

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  • Avatar E5797 
    Participant
    Status: Physician
    Posts: 69
    Joined: 01/31/2016
    Earnest refinancing bonus

    I’ll be starting a small teaching job at a local university on the side and will now have access to a 457b and 403b.  It’s only 12,000 per year salary but I plan to defer it all into either the governmental 457b or the 403b.   My regular employer’s 401k is all employer profit sharing contributions so I think I could use either and not run into problems with excess employee contributions. The distribution options for the 457b are quite good–at the time of distribution I can pick anytime between then and age 70.5 to begin distribution and pick any number of years to have it distributed over.

    It seems the 457b would be the right choice, but is there any reason why I would favor a 403b over the 457b in this scenario?

    #243706 Reply
    Avatar E5797 
    Participant
    Status: Physician
    Posts: 69
    Joined: 01/31/2016

    I will move forward with 457b.

    Maybe it would be worthwhile to put a little into 403b at some point before I leave to have the account available if I change jobs.

    #244868 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4405
    Joined: 01/08/2016

    You don’t contribute any employee portion to your 401k?

    #244883 Reply
    Avatar E5797 
    Participant
    Status: Physician
    Posts: 69
    Joined: 01/31/2016

    You don’t contribute any employee portion to your 401k?

    Click to expand…

    At my old practice, there was an employee share to 401k and employer share.  At my new practice, I have been told it is entirely employer profit sharing which maxes it out.

    #244886 Reply
    Liked by Peds
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4405
    Joined: 01/08/2016

    got it. then 457.

    #244887 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8113
    Joined: 01/09/2016
    The distribution options for the 457b are quite good–at the time of distribution I can pick anytime between then and age 70.5 to begin distribution and pick any number of years to have it distributed over.

    Click to expand…

    Since it’s governmental, it s/b treated same as 401k, i.e. can r/o to an IRA. Since you can take it at any time between retirement and age 70.5, the univ s/b an NPO.

    Maybe it would be worthwhile to put a little into 403b at some point before I leave to have the account available if I change jobs.

    Click to expand…

    I may be missing the point – why would you want to have a 403b available?

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #244900 Reply
    Avatar E5797 
    Participant
    Status: Physician
    Posts: 69
    Joined: 01/31/2016

     

    Maybe it would be worthwhile to put a little into 403b at some point before I leave to have the account available if I change jobs. 

    Click to expand…

    I may be missing the point – why would you want to have a 403b available?

    Click to expand…

    Would it provide the same thing a solo401k would provide if one changed jobs?  A place to roll over a 401k into without having to open an IRA?  If left my main job, would it be a place to roll the 401k into?

    #244938 Reply
    Avatar jhwkr542 
    Participant
    Status: Physician
    Posts: 1312
    Joined: 02/15/2016

    Any match on the 403b? I’m assuming not but is a consideration.

    #244960 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8113
    Joined: 01/09/2016

     

    Maybe it would be worthwhile to put a little into 403b at some point before I leave to have the account available if I change jobs.

    Click to expand…

    I may be missing the point – why would you want to have a 403b available?

    Click to expand…

    Would it provide the same thing a solo401k would provide if one changed jobs?  A place to roll over a 401k into without having to open an IRA?  If left my main job, would it be a place to roll the 401k into?

    Click to expand…

    No. It would be held at the former employer, which would not accept rollovers.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #244980 Reply
    Avatar E5797 
    Participant
    Status: Physician
    Posts: 69
    Joined: 01/31/2016

    No match on either.

    #245011 Reply
    Avatar notadoc 
    Participant
    Status: Other Professional
    Posts: 256
    Joined: 07/15/2016

    From CNBC

    Why these teachers’ retirement plans aren’t making the grade

    Points
    • Public school teachers may save up to $18,500 annually in a 403(b) plan, plus an additional $6,000 if they’re over 50.
    • While total costs for 401(k) plans hit an average of 0.88 percent, annuity-based 403(b) plans that are not subject to federal protections can have annual fees of around 2.5 percent.
    • It may make sense to explore other savings opportunities, including a Roth IRA or state government 457(b) retirement plans.

    https://www.cnbc.com/2018/09/28/why-these-teachers-retirement-plans-arent-making-the-grade.html

    From NYT:

    Margaret Jusinski first got to know her investment broker through the breakfasts he provided when he visited her public school in the leafy suburbs of New Jersey, where she teaches middle-school children computer coding and how to build robots made of Legos.

    After the bagels, muffins and coffee, the broker made his sales pitch — and Ms. Jusinski bought it. So did many of her colleagues.

    The teachers only recently learned how much those meals actually cost them.

    Had she been able to choose a simpler, less expensive plan instead of the broker’s costly offering, Ms. Jusinski would have approximately 20 percent more in savings, according to an analysis performed for The New York Times. One colleague would have a balance 50 percent fatter.

     

     

    #245124 Reply
    Liked by Tim
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3030
    Joined: 09/18/2018

    Seems like the exit strategy is your focal point.
    Which one is better regarding fees and available investments?
    Cart before the horse? Might make a difference whether you leave them be!

    #245132 Reply

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