I currently have a good amount of money stashed in a 457 from a previous employer. The monies are a mix of pre-tax and Roth investments. The 457 is through Nationwide and offers decent funds (My money is all in various Vanguard funds). The plan carries a 0.14% (0.014/14 basis points) administrative fee.
Would it be advantageous to withdraw this money and place it all in my Vanguard IRA account?
I have been hesitant because of the lenient withdrawal options afforded in a 457 plan. Essentially, since I have left the employer, I am free to withdraw at anytime should I decide to retire early.
I also have TSP as I'm currently on active duty in the National Guard and will most likely retire from here in another 16-19 years. I was also exploring the option of rolling the 457 into traditional and Roth IRAs at Vanguard and subsequently rolling the funds over to the TSP. Would this be a more advantageous option?
TIA
Withdraw from 457?
Re: Withdraw from 457?
Is this a government employer or a private employer?
Re: Withdraw from 457?
I'd keep it in the 457 because it can be used as a backup emergency fund. If you move it to an IRA, you'd incur a penalty for withdrawing early.
Re: Withdraw from 457?
I should have noted, I have over a year's worth of expenses stashed away in a taxable brokerage account as an emergency fund. I was trying to steer clear of a super drawn-out post based on the BH "portfolio questions" model post.
Re: Withdraw from 457?
It sounds to me like they are all good options, with the added benefit you mention of being able to use 457 without penalty. That would make it worth considering, since it has reasonable costs as well. When penalty-free, you might consider rolling to TSP or Vanguard.
Last edited by BL on Tue Feb 27, 2018 6:06 pm, edited 1 time in total.
Re: Withdraw from 457?
Since it is a good plan, I see no reason to move the money out and lose the availability of having the money any time you need it. That could end up being very useful at some time in the future.
If it were a poor plan with high costs, I'd consider rolling it into the TSP.
If it were a poor plan with high costs, I'd consider rolling it into the TSP.
Link to Asking Portfolio Questions
Re: Withdraw from 457?
9r
I don't know what state you are in, or if that even matters. I had a 457 in Indiana with Nationwide that did not include Vanguard funds. When Nationwide moved my Fidelity Contra and Low Price funds to a "Nationwide equivalent", and also charged .95% for the experience, I balked. After I retired, I transferred the Nationwide account to a Vanguard IRA with no tax penalties. And also moved funds that had an average ER of .50% to .09% Vanguard ER without the .95% Nationwide surcharge. Your .14% Nationwide experience Is a lot better than my .95% experience.
YMMV
Greg
edit: You don't want to withdraw the money, you want to transfer the money
Re: Withdraw from 457?
I'll echo the recommendations of the others and say to leave it in the 457(b) plan. You never know what the future might bring and it's good to have the 457(b) standing by just in case you get injured, get sick, or anything else happens that drops you out of the work force before age 59.5.
If you absolutely want to roll it over to the TSP anyways, roll it directly from the 457(b) plan to TSP. Do NOT use IRAs as intermediaries. For one, TSP does not accept rollovers from Roth IRAs. For another, it's a completely unnecessary step because TSP accepts rollovers from both traditional and Roth governmental 457(b) plans.
If you absolutely want to roll it over to the TSP anyways, roll it directly from the 457(b) plan to TSP. Do NOT use IRAs as intermediaries. For one, TSP does not accept rollovers from Roth IRAs. For another, it's a completely unnecessary step because TSP accepts rollovers from both traditional and Roth governmental 457(b) plans.