Are you looking to retire soon? If so, you’ll need to start planning. One crucial factor to consider is your 457 savings. How much money will you have available each month in retirement? Use our free 457 calculators to estimate your savings and income in retirement. This tool is easy to use and can help you make informed decisions about your future.
- 457 Savings Calculator
- What Is A 457 Plan?
- What Is A 457 Savings Calculator?
- How Does The Calculator Work?
- 457 Withdrawal Calculator
- 457(b) Withdrawal Comparison
- What Is A 457 Withdrawal Calculator?
- What Is The Difference Between A 457 Plan And A 401k?
- Next Steps
- Frequently Asked Questions
- How much should I put into a 457 plan?
- What happens if I contribute too much to my 457 plan?
- When can I withdraw from my 457 without penalty?
- Can I withdraw from my 457(b) to buy a house?
- How much tax will be taken out of my 457 withdrawal?
- Is Roth IRA better than 457?
- How can using a 457 calculator help you stay within annual contribution limits?
- How can using a 457 calculator help you project the impact of the average annual compounded rate on your retirement savings?
- How can a 457 calculator help you maximize your retirement savings by factoring in the impact of employer contributions?
- How does a 457 calculator take into account your salary paid?
- How can using a 457 calculator help determine the impact of other benefit deductions on your take-home pay?
- How can a 457 calculator help you determine the ideal contribution amount based on your annual salary?
- Related Tools
- Request A Quote
457 Savings Calculator
Use our 457 savings calculator to estimate your retirement savings. Input your annual contribution limits, maximum employer matching contributions, and assumed annual rate of return.
What Is A 457 Plan?
A 457 retirement savings plan is available to eligible employees, such as government workers and some non-profit organizations. With this plan, contribution occurs on a pre-tax basis, which allows employees to defer paying taxes on their contributions until they withdraw the funds from the plan. This tax advantage is one of the many benefits of a 457 plan for employees looking to maximize their retirement savings.
The maximum contribution limit for a 457 plan is typically higher than that of a traditional 401k plan, allowing specific maximum total contributions to be made. This can be advantageous for employees who want to save more for retirement. In addition, some 457 plans offer exceptional catch-up contributions for employees nearing retirement age who have not saved enough.
Withdrawals from a 457 plan are subject to income tax, but if the employee waits until retirement age to withdraw the maximum percent of the funds, they may be in a lower tax bracket and pay less in taxes overall. Some 457 plans also allow for penalty-free withdrawals in certain circumstances, such as an unforeseen emergency or severe financial hardship. Additionally, some plans may offer maximum employer matching contributions, providing even more incentive for employees to save for retirement through a 457 plan.
What Is A 457 Savings Calculator?
A 457 savings calculator is a tool that helps you estimate how much money you could save, taking into account factors like your current salary, maximum annual contributions, and the number of years you plan to save. The calculator considers several factors, such as your current salary, the amount you plan to contribute to the plan each year, and the number of years you plan to save.
Using a 457 savings calculator can be helpful in several ways. It can help you:
- Determine how much you must save yearly to reach your retirement savings goals.
- Compare different scenarios, such as increasing your contribution rate or delaying retirement, to see how they impact your savings.
- Estimate the tax savings you could receive by contributing to a pre-tax 457 plan.
- Plan for retirement by seeing how your savings will grow over time.
How Does The Calculator Work?
A 457 calculator is a tool that helps you estimate how much money you can save in a 457 retirement plan. Here’s how it works:
- Input your current age: This helps the calculator determine how long you have until retirement.
- Input your current salary: This helps the calculator estimate your future earnings.
- Input your contribution rate: This is the percentage of your salary you plan to contribute to the 457 plan.
- Input the employer match: Some employers offer a matching contribution to the 457 plan. If your employer offers a match, input the percentage or dollar amount here.
- Input the expected annual rate of return: This is the average rate of return you expect to earn on your 457 plan investments.
- Input your expected retirement age: This helps the calculator determine how many years your savings will have to grow.
- Input your expected retirement income: This is the money you will need annually.
Once you have input all the necessary information, the 457 calculators will estimate how much money you will have saved by the time you retire.
457 Withdrawal Calculator
As retirement age approaches, many people worry about how they will withdraw from their retirement savings plan. One option that can provide peace of mind is an annuity with a guaranteed lifetime withdrawal benefit (GLWB).
An annuity is an insurance policy that guarantees to distribute a paycheck to you for the rest of your life, even after the 457-employee savings plan runs out of money. This can provide much-needed security in retirement, knowing that you will have a regular income stream no matter what happens with your other retirement savings. In addition, an annuity can help to automate the retirement withdrawal process for 457 savings plans, making it one less thing you have to worry about.
So, if you are approaching retirement age and are wondering how to best withdraw from your retirement savings, an annuity with a GLWB may be worth considering.
Note: You can purchase an annuity (with no tax penalties) with your 457(b) deferred compensation plan, 401k, IRAs, retirement accounts, investments, and cash.
457(b) Withdrawal Comparison
Historically financial advisors recommend withdrawing 4% from your 457(b) plan and adjusting for inflation. However, the 4% rule has been debunked as a safe withdrawal rate. New research concludes as low as 2.8% is the new rule. The following table compares rolling your 457 into a new annuity with withdrawing income yourself or utilizing an advisor.
|Withdrawal Percentage||5.20% – 6.55%||4%||4%||4%|
|Can Income Increase?||Yes||Yes||Yes||Yes|
|Can Income Decrease?||No||Yes||Yes||Yes|
|How Long Will Money Last?||Lifetime||30 Years+||30 Years+||30 Years+|
|Annual Fees||0 – 1.50%||1% – 4%||1% – 4%||1% – 4%|
|Death Benefit||Account Balance||Account Balance||Account Balance||Account Balance|
Example: A 60-year-old retiree starts withdrawing immediately from their $1 million portfolio, they would receive:
What Is A 457 Withdrawal Calculator?
A 457 withdrawal calculator is a tool that helps you estimate the taxes and penalties associated with withdrawing money from a 457 retirement plan before retirement age. In general, withdrawing money from a 457 plan before age 59 ½ can result in a 10% early withdrawal penalty and income taxes on the withdrawn amount.
Using a 457 withdrawal calculator can be helpful in several ways. It can help you:
- Estimate the taxes and penalties you may owe if you need to withdraw early from your 457 plan.
- Compare the costs of withdrawing money from your 457 plan versus taking a loan from the plan, which may be subject to different rules and fees.
- Plan for retirement by understanding the impact of early withdrawals on your retirement savings.
To use a 457 withdrawal calculator, you will typically need to input information such as the amount you plan to withdraw, your current age, and a percentage of your annual tax bracket. The calculator will then estimate the taxes and penalties you may owe on the withdrawal.
What Is The Difference Between A 457 Plan And A 401k?
The main difference between a 457 and a 401k plan is the employee’s contributions and who is eligible to participate.
A 401k plan is a type of retirement plan typically offered by private companies to their employees. Any employee who meets the eligibility requirements can contribute to a 401k plan on a pre-tax basis up to the annual contribution limit set by the IRS. After that, the money in the plan grows tax-free until it is withdrawn, at which point it is taxed as income.
A 457 plan, on the other hand, is a type of deferred compensation plan typically offered to government employees and some non-profit employees. Eligible employees can contribute to the plan on a pre-tax basis up to the annual contribution limit set by the IRS. After that, the money in the plan grows tax-free until it is withdrawn, at which point it is taxed as income.
One key difference between the two plans is the contribution limits. In 2023, the annual contribution limit for a 401k plan was $22,500, with an additional $7,500 catch-up contribution allowed for those over age 50. The annual contribution limit for a 457 plan is also $22,500, but eligible employees may be able to make additional catch-up contributions depending on their employer’s plan.
Retirement planning doesn’t have to be one size fits all. Depending on your unique circumstances and goals, several ways to save for retirement can give you the peace of mind you deserve. Our 457-employee savings plan calculator is an excellent tool for estimating how much you need to save. And for those looking for guaranteed income in retirement, an annuity with a GLWB rider may be the right solution. Contact us today for a quote.
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Frequently Asked Questions
How much should I put into a 457 plan?
The amount a participant can contribute to their 457(b) plan annually cannot exceed either: 100% of the participant’s compensation that is taxable or the elective deferral limit ($22,500 in 2023 and $20,500 in 2022).
What happens if I contribute too much to my 457 plan?
If you defer too much compensation into an eligible deferred compensation plan, you may jeopardize the plan’s status under IRC Section 457(b) unless you act quickly to correct the issue.
When can I withdraw from my 457 without penalty?
With a 457 account, you can withdraw without being penalized at any age. However, if you try to withdraw money from other retirement savings plans before reaching the minimum age (55 or 59½, depending on the plan), you will be charged a 10% penalty.
Can I withdraw from my 457(b) to buy a house?
You cannot withdraw money from a 457 plan at any point for any reason until you leave employment.
How much tax will be taken out of my 457 withdrawal?
Suppose you take an eligible rollover distribution from your governmental 457(b) plan. In that case, the government will withhold 20% of the distribution for income taxes unless you directly roll it over into another governmental 457(b) plan, IRA, 403b plan, or qualified plan. This is because withdrawals from 457 retirement plans are taxed as ordinary income; however, distributions from a ROTH 457 Plan are not subject to taxation.
Is Roth IRA better than 457?
Your Roth IRA will be most beneficial if tax rates increase when you retire, as your withdrawals would be tax-free. However, if taxes lessen when you retire, your 457 accounts will work more in your favor from a financial perspective. In other words, having both types of accounts can help stabilize things.
How can using a 457 calculator help you stay within annual contribution limits?
A 457 calculator can help you stay within annual contribution limits by providing projections and recommendations on how much you can contribute based on your income and other factors.
How can using a 457 calculator help you project the impact of the average annual compounded rate on your retirement savings?
A 457 calculator can help you project the impact of the average annual compounded rate on your retirement savings by factoring in your contributions and investment choices over time.
How can a 457 calculator help you maximize your retirement savings by factoring in the impact of employer contributions?
A 457 calculator can help you maximize your retirement savings by factoring in the impact of employer contributions and providing recommendations on how to make the most of them.
How does a 457 calculator take into account your salary paid?
A 457 calculator considers your salary when calculating your potential retirement savings by factoring in your income and other relevant information.
How can using a 457 calculator help determine the impact of other benefit deductions on your take-home pay?
A 457 calculator can help determine the impact of other benefit deductions on your take-home pay by factoring them into your overall financial picture and retirement planning strategy.
How can a 457 calculator help you determine the ideal contribution amount based on your annual salary?
By inputting your annual salary into a 457 calculator, you can determine the ideal contribution amount to maximize your savings potential.