457 Retirement Plan | 457b Explained

***2022 updates included in description: A 457 retirement plan is a way for you to invest in your future by using tax benefits and compound interest. Some people refer to it as "Deferred comp" or "Deferred Compensation Plan". It's very similar to a 401k with a few small differences we'll discuss in this video. As of 2022 you can contribute up to $20,500 into your 457 plan. If you are age 50+ you can do more, up to $26,000/year. You can choose to do either a Roth 457 or Traditional 457, or both (the total of both cannot exceed $19,500). Usually there is no match with a 457b because they typically supplement a pension plan. However, if your 457 does offer a match take full advantage of it, it's free money! You're allowed to combine a 457b with a IRA, 401k, or 403b. It is common to do a large amount in your 457b and max out a roth IRA as well ($6,000/year). One unique benefit to a 457b is you can withdraw the money as soon as you leave your employer, unlike a 401k where there is a 10% penalty. Any withdrawals from a traditional 457b will be taxed and any withdrawals from a roth 457b will be taxed unless you're age 59.5+. A common question I get is can you borrow from your own 457 plan, typically yes but you will have to pay back the money plus interest. Also, you put yourself at risk that if you leave your employer and still owe a balance on the loan it will be due in full immediately. To set up a 457b plan check with your HR or a co-worker to see which company your employer uses. Then go to that company's website and register for an account. From there you can choose a dollar amount or percentage that you want withheld from your paycheck. As far as investing in your 457b plan, consult your financial advisor because I cannot give you financial advice. But if I was you I would look at all the funds offered and compare their 10 year rate or return. Then pick 2-3 funds that have a 10 year ROI of 11%+. Last tip, when you leave your employer you can roll over your 457 to an IRA. An IRA will have more investment options and specifically, a Roth IRA has some unique benefits. But if you do rollover your 457 then you will no longer be able to withdraw money penalty free before age 59.5. 🎥 Roth TSP vs Traditional TSP: https://youtu.be/fdWULhmTc10 🎥 Should you choose Roth or Traditional? https://youtu.be/6fPGshrBYyw 🎥 How much do you need to Retire? https://youtu.be/mTO4-tYfx5s 🎒FINANCIAL BOOKS I HIGHLY RECOMMEND: 1. Rich Dad Poor Dad: What the Rich teach their kids about money that the poor and middle class do not. https://amzn.to/2SLWLhw 2. Everyday Millionaires: How Ordinary People Built Extraordinary Wealth. https://amzn.to/3dno5Mr 3. The 4-Hour Workweek: Escape 9-5, Live Anywhere, And Join the New Rich. https://amzn.to/34IkSTS 🙋‍♂️1 on 1 Sessions Available @ https://timwolffe.com/services This video is not sponsored. Some product links are affiliate links which means if you buy something I may receive a small commission at no extra cost to you. This is not investment advice. #timwolffe #personalfinance 00:00 457b Explained 04:59 Withdrawing From a 457 08:13 How to Set Up a 457 08:52 457 Investing