Why consider a 457(b)?
We all need to supplement Social Security and pension benefits with personal retirement savings to help provide the level of income that we will need in retirement. This is especially true with longer life expectancies and fewer employers offering traditional pension benefits. A 457(b) can help provide government employees with a tax-deferred investment account that offers the potential for retirement savings growth
What are the advantages?
Pretax contributions: You do not pay current federal income taxes on your contributions into a 457(b) account. For example, if you are in the 25 percent tax bracket and contribute $100 per pay period to your 457(b) account, your “take-home” pay will be reduced by just $75.
Tax-deferred growth: Your 457(b) account grows on a tax-deferred basis, meaning that any appreciation, earnings, interest, capital gains and dividends are not taxed until the funds are withdrawn. This allows assets to accumulate at a faster pace, a major advantage when saving for the long term. Also, you may be in a lower tax bracket after you retire, which will allow you to keep more of what you have accumulated.
Convenience: Contributions are deducted automatically from your paycheck, so there is no need to worry about writing a check or missing an investment opportunity.
Your Representative can help you decide if a 457(b) plan is right for you.