Which Is Better, a 457 or 403 B Retirement Plan?

It's hard to know which is better for you, a 457 or a 403(b) retirement plan.

457 and 403(b) Plan Similarities

Both 457 and 403(b) retirement plans offer tax-free investment options.

Both 407 and 403(b) retirement plans are deferred compensation plans. Under both plans, the employee contributes pretax income, and pays no further taxes on monies held in the plan until separating from the employer. Both plans offer a selection of investment opportunities through the plan sponsor.

457 and 403(b) Plan Differences

Many employers offer both 457 and 403(b) retirement plans.

The 457 retirement plan is provided for state and municipal employees. The 403(b) plan is provided for non-profit organization employees. As a result, there are many state and municipal employers who are able to make both investment options available to their employees.

Bottom Line

Review the investment options offered by both plans before making a decision between the two.

The most important criteria for deciding between the value of a 457 retirement plan and a 403(b) retirement plan is the investment options provided by the specific plan sponsor. Review the selection of investment options and talk with the plan representative about the risks and benefits of each option.

References

• 403bWise: Features:Fiduciary Liabilty
• Retirement Plan Advisors: 403(b) and 457 Retirement Plan Comparison Chart