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Finance Flash Go! Episode #50: 457 Accounts

Today on the Finance Flash Go! podcast, we are going to talk about 457 accounts!

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A 457 investment account is another tax advantaged retirement account. It comes in two flavors: governmental 457 and non-governmental 457.

Governmental 457 accounts are more common and cater to local and state public workers rather than for-profit employers like 401(k)s.

457 account

Non-governmental 457s are available to certain tax-exempt non-governmental institutions. They are similar but, in general, governmental 457s are a bit better.

Like 401(k)s, 457s allow pre-tax contributions that grow within the account and are taxed upon withdrawal. The 2020 contribution limit is $19,500. While employer contributions are possible, the total limit stays $19,500. This means that is your employer will contribute $10,000, you can only contribute $9,500.

The disadvantage again is that you can only withdraw from this account without a 10% penalty at age 70½ or for other qualified emergencies, etc.

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I really hope that you all enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected]

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    Jordan Frey MD, a plastic surgeon in Buffalo, NY, is one of the fastest-growing physician finance bloggers in the world. See how he went from financially clueless to increasing his net worth by $1M in 1 year and how you can do the same! Feel free to send Jordan a message at [email protected]

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