No announcement yet.

457 question - is this a bad fund?

  • Filter
  • Time
  • Show
Clear All
new posts

  • 457 question - is this a bad fund?

    Hi folks. My question is whether or not (and how) I should invest in a 457 - which doesn’t have the best funds (maybe).

    Background, first:
    I recently finished residency and have chosen a career that is highly-rewarding… except for all things related to earning money: high cost city, generalist, working in academic medicine, and working for the municipal health department. My patients are great, the work is good, but the compensation is poor.

    I contribute to a Roth IRA (and spousal) through Vanguard.
    Also, with my employer, I get a 403b through Prudential.
    I invest in: VIIIX (institutional S&P), VBTIX (total bond market), and VTSNX (international) with the 403b.
    But, it is not matched, since we contribute to a pension.
    I don’t mind having a real high savings rate for retirement right now, can always cut back later.

    But: I noticed we also get this deferred compensation plan: 401k vs 457, through the city.

    I guess the 401k makes no sense, as I have the 403b (total would have to equal $18.5 K). Whereas, the 457 is in addition to the 403b, so I could put away $37 K total, each year.

    But the fund’s are:

    I’d go for the Equity Index Fund Profile, which seems to be an S&P 500 with fee of 0.05%.

    But I just haven’t heard of BNY Mellon, and I don’t know if I’m missing something else big here.

    FYI: The NYC public hospital system is the largest in the country, by far. We have around 11 hospitals, but I work in a giant DTC. I think my question is shared by thousands of other docs, whether they know it yet or not.

    If it matters, I probably won’t be able to stick out this job forever, so eventually I’ll get a refund on that pension (grows at 5%, compounded annually) and go to part time elsewhere, once my wife finishes her PhD…

  • #2
    Welcome to the forum.  Bank of New York Mellon is primarily know for its Institutional Custodian Services, where they are the largest player.  In simple terms, Funds like Vanguard, Pimco, Hedge Funds, Endowments, Pensions, and the Ultra-High Net Worth will use them to safeguard their assets.  They have an extremely stable balance sheet which is why so many institutions use them.

    As a money manager, they are similar to Northern Trust where they have some trading strategies but it isn't their core business.  An S&P 500 indexing strategy is not difficult to run, and at 0.05% I would feel very comfortable using them.