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

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