My wife (IM) is leaving her job in a few months. She has about 40k in a nongovernmental 457 with the employer she is leaving. We are struggling a little with what to do with this money.
Options as I understand them would be to distribute all the money on departure and pay income tax on it (41% fed, 10% state); or to hold on to it and wait to start distributions.
We were always a little uncomfortable with the nongovernmental 457 but we did it anyway after maxing out my corporate profit sharing 401k (I am anesthesia) and her 403b in order to decrease our tax burden. The company she is leaving does not appear top be in any financial duress (not sure we would know anyway) but it is sure hard to predict whether they will be in the next 30 years, which is our time frame before we would retire.
So our thought process has been to liquidate the account when she leaves, pay the nasty tax burden and either put the rest towards student loans or contribute to backdoor Roth IRAs for each of us, which we haven't done yet. Sound reasonable?
Thanks.
Options as I understand them would be to distribute all the money on departure and pay income tax on it (41% fed, 10% state); or to hold on to it and wait to start distributions.
We were always a little uncomfortable with the nongovernmental 457 but we did it anyway after maxing out my corporate profit sharing 401k (I am anesthesia) and her 403b in order to decrease our tax burden. The company she is leaving does not appear top be in any financial duress (not sure we would know anyway) but it is sure hard to predict whether they will be in the next 30 years, which is our time frame before we would retire.
So our thought process has been to liquidate the account when she leaves, pay the nasty tax burden and either put the rest towards student loans or contribute to backdoor Roth IRAs for each of us, which we haven't done yet. Sound reasonable?
Thanks.
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