Any input on 457 plans?

[HardDrive]

My wife is being offered a 457 plan at work. Any input on this? I've never even heard of them.

[peppy]

My wife just started one at work. I think if you are going to retire before 59 1/2 you can get the money and not be penalized like a 401k or IRA.
Only government employees are eligible for them.

[KFC911]

Originally Posted by peppy

.... I think if you are going to retire before 59 1/2 you can get the money and not be penalized like a 401k or IRA.
.....

I have posted about this before and I don't know why it isn't common knowledge by the "professionals" who advise about such things. The above "fallacy" is often repeated by professionals who SHOULD know better (not you Peppy ). The penalty can be avoided by simply taking "72t distributions" (essentially equal payments each year based upon a formula which sets a maximum amount). Do a search (including the IRS site) if you are interested...TurboTax now has it built in (wasn't always the case), but it simply "flies below the radar" for many folks.

[peppy]

Thanks KC

[stogie25]

I have one. It is basically a 401 for government employees. The money going in is pretax. When you take money out it is taxed. There is no penalty for using it in early retirement. You have to start taking money out at 67.

[pavulon]

some may have missed the wiki page... . I'm non-gov't employed and on one in addition to a 403 plan. When tempted to contribute past the employer contribution, I remember the following:

"The Internal Revenue Code requires that money in a non-governmental 457 plan remains the property of the employer and is thus available to general creditors of the employer in legal or bankruptcy proceedings."

457 plan - Wikipedia, the free encyclopedia