457 Retirement Plan
A 457 retirement plan is a great investment option for employees of certain state and local government agencies, employers of tax-exempt organizations and even independent contractors who are looking for a smart financial tool to prepare for the future. A diverse investment portfolio is necessary to create security long after retirees have completed their working years. This type of account offers tax advantaged savings that can be an important element of the portfolios of future retirees.
A 457 retirement Plan is a type of deferred compensation account that provides tax protected advantages that are similar to those of other retirement plans. However, this type of plan has benefits that many investors like. With flexible investing options and availability to independent contractors, a 457 plan provides a great way to plan for retirement. In addition, unlike investment plans such as 401ks and 403bs, these smart plans do not subject investors to a penalty fee for early withdrawal, only regular income tax fees. Employees and employers of tax-exempt businesses who are building their retirement investment portfolios may prefer a 457 retirement plan because of fewer fees to access their money should they ever find the need to do so prior to retiring.
If you have access to a 457 retirement plan through your employer, or if you are a qualifying employer looking for an investment plan to provide to your valued employees, this is a beneficial plan option for investing for retirement. The tax advantages of allocating savings into this type of account allow future retirees to invest wisely for their futures. In additions, employers who offer 457 retirement plans to their staff are protected by the provider, which makes this type of investment tool a good option for employees and employers alike. Even if you are an independent contractor who is searching for good investment options, you will like the fact that you will have easier access to the money you put into a 457 retirement plan as compared to the early withdrawal penalties imposed by similar types of investment accounts.
You may be wondering if you are eligible to take advantage of a 457 retirement plan. Maybe you like the fact that you can withdrawal money from such an account without having to pay an early withdrawal fee, which is usually a 10 percent penalty. Or maybe you have other assets and savings accounts in your portfolio and want to add other plans to diversity your funds so you have more money to rely on when you retire. Understanding the availability of the 457 is the first step you should take as you prepare to complete your portfolio for your future.
Many government agencies, such as police departments, fire departments, and local municipalities offer a 457 retirement plan. If you have a career in one of these types of agencies and think that investing in this type of retirement account would be beneficial to you, you should start by checking with your employer to see if this type of option is available. If so, your next step should be to consult with a reliable financial planner to determine the best strategy for you when it comes to putting money into this beneficial account.
Some non-governmental agencies such as some non-profit organizations and some tax-exempt businesses also offer the 457 retirement plan to employees. Unlike popular 401k plans and 403b plans, some independent contractors can also qualify to set up this type of investment account. This flexibility makes it an investment tool that is more accessible to those who might not otherwise qualify to invest in similar plans. Contributions into this variety of account from employees' salaries are tax-free until funds from the plan are provided. Therefore, money that is set allocated can grow over the years and decades in which individuals work and contribute into this important financial option.
Another flexible feature of a 457 allows employees to contribute the maximum amount allowed into multiple plans offered by their employers instead of dividing the amount between plans. For example, if an employer offers a 401k and a 457, an employee can contribute the maximum amount allowed in any given year to each account. This allows the savings of future retirees maximum opportunity to grow in preparation for their future retired years.
It is wise for future retirees to invest in multiple accounts in order to have enough money for the rest of their lives. Doing so will result in diverse investment portfolios that will provide income once they no longer have regular paychecks to depend on. A 457 retirement plan is great option to take advantage of when available that offers flexibility and less early withdrawal penalties, resulting in an investment tool that is beneficial to those who add it to their portfolios.
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