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