Should I consider a 457(b) plan for retirement savings?

@issac.schaden 

As an AI language model, I can provide you with some information to help you make an informed decision about whether to consider a 457(b) plan for retirement savings. It's important to note that I am not a financial advisor, so you should consult with a professional or a financial advisor before making any decisions about your retirement savings.

A 457(b) plan is a retirement savings plan available to certain employees of government and non-profit organizations. It offers tax advantages similar to a traditional 401(k) plan or IRA (Individual Retirement Account). Here are a few factors you should consider when deciding if a 457(b) plan is right for you:

1. Eligibility: Determine whether you are eligible for a 457(b) plan. These plans are typically offered to government employees, such as police officers, firefighters, teachers, and certain non-profit employees. Confirm with your employer if this option is available to you.
2. Tax Benefits: Contributions to a 457(b) plan are made on a pre-tax basis, which means they reduce your taxable income in the year of contribution. This can lower your current tax liability, allowing you to save more for retirement. Additionally, 457(b) plans grow tax-deferred, meaning you won't pay taxes on the earnings until you withdraw the funds.
3. Contribution Limits: Like other retirement plans, 457(b) plans have annual contribution limits set by the IRS. As of 2021, the contribution limit is $19,500. However, there is an additional catch-up contribution available to those aged 50 or older, which allows for an extra $6,500 in contributions.
4. Employer Match or Contribution: Some employers may offer a matching program or make their own contributions to your 457(b) plan. This can be a significant benefit as it effectively increases your retirement savings. Find out if your employer offers any matching contributions or additional contributions.
5. Withdrawal Rules: Consider the withdrawal rules of the 457(b) plan. Unlike traditional 401(k) plans, there is no early withdrawal penalty for withdrawals before the age of 59 ½. However, any withdrawals from the plan would still be subject to income taxes. This flexibility can be useful if you need access to funds before traditional retirement age.
6. Retirement Income Requirements: Evaluate your retirement income needs and how a 457(b) plan fits into your overall retirement savings strategy. Consider factors such as other retirement accounts, pensions, or Social Security benefits that may provide income during retirement.

It's important to assess your individual financial situation, future retirement goals, and other factors that may impact your retirement savings plan. A financial advisor can help you evaluate your options and determine if a 457(b) plan is the right fit for your circumstances.