Does he have a Roth option? Locking in his taxes while he is at a fairly low tax rate now may be more advantageous than deferring the taxes when his income will probably be higher and the tax rate in the future is an unknown.
Yes, and I too am a fan of Roth’s as much as possible. He is also on board with that.
One really cool thing about the 457s seems to be the catch up provision, but am getting confused on the details. It seems that as of age 50, eons away for Youngest who is not yet 25, both the 401K and 457b allow for catch up of an additional $6500 in todays law. For the 457b there are also : "Special 457(b) catch-up contributions, if permitted by the plan, allow a participant for 3 years prior to the normal retirement age (as specified in the plan) to contribute the lesser of:
the elective deferral limit ($20,500 in 2022; $19,500 in 2020 and in 2021).
The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions)"
https://www.irs.gov/retirement-plans/plan-participant-employ…
I am no doubt dropping into the possible vs the probable at this time, but since we are trying to figure out which plan to use from day 1, am looking far into the future. Who knows if he will even still be with this gov’t entity in 25 years and able to take advantage of catch ups, or if there will be a need to use a catch up provision given he has the ability to invest in both a 457 and a 401K. I am trying to understand if there is any real benefit to the 457’s catch up provision, or if the more typically provided 401K might be better for portability to other companies should he move to a private company and away from Gov’t. He gets a 5% match either way, and is going to put that much into whichever account he choses, at least to start. I have doubts he would need to put funds both in 401K, 457 and do catch up, particularly since we continue to fund our kids’ Roth IRAs as a way to transfer a small amount of assets.
TIA,
IP