Here’s the great thing about a 457 — no early withdrawal penalty. A 457 deferred compensation retirement plan is much like a 401(k), but specifically for public employees. With both, you contribute pretax dollars that grow taxdeferred. You pay taxes when you withdraw your money.
But here’s the key difference. With a 401(k), you pay a 10% early withdrawal penalty tax if you’re younger than 59½. With your 457, you aren’t subject to such a penalty. What does this mean to you? Imagine if you lost your job and had to tap your retirement savings to pay bills. You might consider a 457 to be employment insurance. If you leave your job at any time, for any reason, you can withdraw penalty-free.
Maybe you plan to retire early. You can count on your 457 for penalty-free withdrawals at any age. Speaking of early retirement, did you know you can use your 457 or 401(k) to buy future service credit toward your URS pension? Transfer funds directly from the savings plans, with no taxes or penalties, to “buy” service credit and increase your pension benefit.
It’s easy to open a 457 and to adjust your contributions. Just log in to myURS at www.urs.org to easily manage your account and start building for a better tomorrow.