Cheat Code! Check your pre-tax retirement saving options to see if you qualify for a 457b.
If you work for certain types of organizations —like a university or municipality—you may have access to a 457b, which not many people have heard of. The plan is limited to specific professions, primarily:
- Government employees: This includes federal, state, and local government workers, including teachers, police officers, firefighters, and civilian employees.
- Tax-exempt organization employees: These include employees of non-profit organizations, public schools, and certain churches.
The 457b has pretty much the same rules as a 401k (or 403b) - but due to the way it's classified, it doesn't fall within the same limit structure as a 401k or 403b - meaning that even if you’ve maxed out your 401k, you can put away another $22,500 pre-tax using a 457b.This can essentially double the amount of pre-tax savings going toward your retirement and double the end-of-year taxable income deductions each year. In addition, catch-up contributions of $7,500 are available to those aged 50 and older.
The deadline for contributions is 12/31, so if you have a 457(b or f) available to you - and you can afford to - try to max out that fund now. As we get closer to the end of the year, double-check the retirement savings tools you have at your disposal.
Any questions? Reach out to Range.