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After tax contributions or 457b

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  • After tax contributions or 457b

    I'm already maxing company 401k. Q on which would be the next best investment
    Company offered non-govt 457b with reasonable disbursement OR
    After tax contributions to 401k (with allowed in plan roth conversion)?


  • #2
    I say the latter just because it’s rarer to have that as an option at a potential future employer, and we know the mega backdoor Roth is under legislative risk. Further, as you note you’re doing a bunch pre tax and tax diversity is key


    • #3
      This question gets asked in some form every few months on this forum, so you could probably check back through with a search and find some viewpoints.

      I think it depends somewhat on what tax bracket you are in now and what your anticipated bracket in retirement will be. Another factor would be how you plan to utilize the distributions from the 457.

      I have a non-govt 457 that I have elected to use for the last 6 years. My current tax bracket is 35% and I anticipate being in the 24% bracket at retirement. My 457 also has good fund choices with low expenses and good distribution options. I plan to use it for a bridge from early retirement to SS age because I want to withdraw it at a lower tax bracket and I also want to get those funds first since they are theoretically subject to creditors. I could also use that account as a salary if I change jobs or get disabled and can’t work and need money before my elimination period runs.