401k vs 403B vs 457

#1

I have recently signed with a new group that is affiliated with a state university and residency program. They have 453B, 401K and 457 plans which I have the ability to contribute to. Since I am a new grad I don’t have the ability to max out all yet. Which ones would you prioritize contributions to? The 401K they match 6% so I will definitely contribute there but I don’t know much about the 453B and 457 plans.

#2

Hi.

The three plans are likely 401(k), 457, and 403(b).

Most employers who offer multiple options have a primary option, in your case, it’s likely to be the 401(k), since they [employer] match contributions. Employer-matched contributions should be considered first (until you reach the max matching value) since that is “free” money.

All three are tax-deferred financial tools and have specific contribution limitations, withdrawal requirements, etc. Human Resources typically has specialists who can provide specifics of each. Contacting a Certified Financial Planner would also be in order to ensure the strategy you choose is a best fit for your financial situation and needs.

Also, I’m kinda old school, and while retirement planning is absolutely necessary and critical to begin now, I also believe eliminating debt is of equal importance. For example, contributing to a retirement account yielding 6% returns while maintaining debt balances charging 8% or more doesn’t make sense to me. There’s a balance there and everyone’s tolerance and specific financial needs are unique.

Perhaps this video will help.

#3

also clarify whether the 457 plan is a governmental or nongovernmental plan. There are various trade offs such was bankruptcy protection in 457 b non-governmental plans. I am guess since it is a state institution that it is government.

#4

I recommend the 403B and 401k if you can only do 2 of the 3

#5

Agree completely.

457 at risk if institution goes bankrupt. Being at the head of the line may be little comfort (although if CEO is vested that helps). Wouldn’t have more than 5% in 457. They may match that as well as they do ours. Strongly consider Roth if you are young or other tax free vehicle like HSA- only triple tax free currently. You should have taxable and tax free buckets in retirement to manage your tax bracket.

#6

Agree completely with Touz… That is. You will likely have a 403b or 401k depending on tax status of hospital but not both if only at one hospital

#7

thanks all for help. talked with financial and they echoed what @dirkwwoods stated