In certain districts in some states, an alternative deferred compensation plan is offered instead of or in addition to a 403b plan. In my small district in the state of NY, we have a little-known savings plan called a 457. It’s a state-sponsored deferred compensation plan meant for public servants like school district employees and governmental workers. It’s not widely known because no salespeople come on the school grounds to sell it and district personnel are fearful of coming across as giving financial advice, so they just don’t mention its existence.

And that is just too bad. It touts the lowest fees available to all stakeholders. And I mean low, as in 0.03 expense ratios for index funds that yield the same as the average S&P 500 mutual fund and costs pennies more.

So the next time you want to give your deferred compensation plan a closer look, investigate at your business office and seek out a 457. If you find out it’s not an option, ask to get it added. With staff turnover and lack of pressure to offer employees the best option, it could just be that no one ever asked for it, Until now.

Learn more here at the New York State Deferred Compensation Plan.

If you have a 457 plan, it often earns priority over high-cost 403b plans

One thought on “If you have a 457 plan, it often earns priority over high-cost 403b plans

  • June 23, 2019 at 10:07 pm
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    Every public employee in the State of NY has the right to participate in the state administered 457(b) plan. The employer (state and local) never gives financial advice—the employer’s responsibility is to just let the employee know that this de minimis cost plan has been made available by the employer. This communication can be delivered to each employee with the paycheck. This notice can also be promulgated when the employee elects his/her health plan. The union is also available to assure wide plan participation. Non- involvement guarantees that employees will continue to be scalded by the 403(b) sales shark.

    New York’s k-12 community MUST be protected with their 403(b) savings to the same extent as the state protects their 457(b) savings. IT’S LONG OVER DUE FOR A STATEWIDE 403(b) PLAN.

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