Date: Wed, 15 Feb 2006 07:45:50 -0600
From: "HW \"Skip\" Weldon" 
Newsgroups: misc.invest.financial-plan
Subject: Re: 457 vs 401k
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On Mon, 13 Feb 2006 18:18:07 -0600, Nosmo_King58_@_yahoo.com (Nosmo
King) wrote:

>I took a position with the local state government, and have been offered a 
>choice of a 401k and/or a 457 plan.   Is there any advantage of one versus the 
>other ?  Neither plan has matching contributions, and I can choose to 
>contribute to one or both options.  The HR person mentioned that 457 plans 
>allow for withdrawals at any time, regardless of age, without penalty. 

As Elizabeth mentioned, a governmental 457 plan avoids the federal
premature distribution penalty (10%) upon separation of service.  The
only other technical difference I can think of is that 457s are not
trusteed plans - they are an asset of the employer.  I've never seen
this as an issue because most municipalities can tax me to pay you.
  Nevertheless, it bears mentioning.

Beyond that, the real difference between any savings plans is the
investment selection (fund choices and how you allocate among them).
If they are from different custodians and/or offer different choices,
I would pay particular attention to diversification and costs.  Note
also that some 457s have custodian-imposed surrender charges which may
apply.

Bottom line: I consider this an investment matter and suspect that
ultimately your satisfaction with how you handle this issue will swing
on your investment decisions, not the vehicle used.

-HW "Skip" Weldon
 Columbia, SC