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