Companies that offer governmental 457b in NJ

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JFanni
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Companies that offer governmental 457b in NJ

Post by JFanni » Mon Oct 30, 2017 6:21 pm

I work for a local government in New Jersey. Currently they only offer a governmental 457b through nationwide but they are in the process of looking at other companies. Talked to the guy who is meeting with companies and he welcomes suggestions, admitting that he does not know alot about them. Did a search but cant really find anything. Where can i go? What companies offer 457b's? Looking to get info a a couple to present it to the HR guy.

chevca
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Re: Companies that offer governmental 457b in NJ

Post by chevca » Mon Oct 30, 2017 6:32 pm

I also work in govt. and have a 457b. Our plan just recently switched to Nationwide and they seem great. Prior to that, we had Prudential running the show. They were just fine as well.

Are they not happy with Nationwide?

JFanni
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Re: Companies that offer governmental 457b in NJ

Post by JFanni » Mon Oct 30, 2017 6:43 pm

Dont get me wrong. Nationwide is not terrible especially when u compare it to the annuities that they offer with 403b's, But there ER is a little too high for my liking, around .7-.8 for simple index funds. looking for companies that will offer some better choices at a lower ER.

gostars
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Re: Companies that offer governmental 457b in NJ

Post by gostars » Mon Oct 30, 2017 9:23 pm

Texas has a state plan with Empower Retirement, which is one of the big players that has many states and lots of smaller entities. They offer a couple good funds in their core plans here (Vanguard S&P 500 at .02, short-term government bond at .05) and a Schwab brokerage option that has access to pretty much everything including all the Schwab ETFs and mutual funds that are comparable to Vanguard's offerings. Empower's fees seem to be OK but not great, with set dollar amounts per month depending on the value of the account, which work out to about 0.2-0.3% annually by my math, depending on the exact value of the account. I don't know if they're the best out there, but they can probably beat 0.7% on an index fund.

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grabiner
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Re: Companies that offer governmental 457b in NJ

Post by grabiner » Tue Oct 31, 2017 10:24 pm

Note that 457b plans in NJ are not quite as desirable as in other states, because NJ does not allow a deduction for contributions. If you still live in NJ when you withdraw the money, you pay NJ tax only on the gains; if you retire in another state with an income tax, you pay state tax on the whole balance.
David Grabiner

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Re: Companies that offer governmental 457b in NJ

Post by student » Tue Oct 31, 2017 10:39 pm

grabiner wrote:
Tue Oct 31, 2017 10:24 pm
Note that 457b plans in NJ are not quite as desirable as in other states, because NJ does not allow a deduction for contributions. If you still live in NJ when you withdraw the money, you pay NJ tax only on the gains; if you retire in another state with an income tax, you pay state tax on the whole balance.
If I understand this correctly, this is horrible. If option 1 is contributing to a 457b plan and option 2 is contributing to an after-tax account. Since there is no deduction, the amount to invest is the same in either case. Assume both are invested in a low cost tax-efficient index fund, then option 1 has no tax on the dividend and capital gain on an yearly basis. However when one takes the money out, the gains will be taxed and I assume at the ordinary tax rate, whereas option 2 will mostly be capital gains. Without doing the math, it seems that option 1 is not much better. If one retires to another state, it will be worse. Am I understanding this correctly? This is worse than Pennsylvania, if I understand it correctly as no deduction on the contribution but no tax on withdrawal there, like a Roth.

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grabiner
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Re: Companies that offer governmental 457b in NJ

Post by grabiner » Tue Oct 31, 2017 10:45 pm

student wrote:
Tue Oct 31, 2017 10:39 pm
grabiner wrote:
Tue Oct 31, 2017 10:24 pm
Note that 457b plans in NJ are not quite as desirable as in other states, because NJ does not allow a deduction for contributions. If you still live in NJ when you withdraw the money, you pay NJ tax only on the gains; if you retire in another state with an income tax, you pay state tax on the whole balance.
If I understand this correctly, this is horrible. If option 1 is contributing to a 457b plan and option 2 is contributing to an after-tax account. Since there is no deduction, the amount to invest is the same in either case. Assume both are invested in a low cost tax-efficient index fund, then option 1 has no tax on the dividend and capital gain on an yearly basis. However when one takes the money out, the gains will be taxed and I assume at the ordinary tax rate, whereas option 2 will mostly be capital gains. Without doing the math, it seems that option 1 is not much better. If one retires to another state, it will be worse. Am I understanding this correctly? This is worse than Pennsylvania, if I understand it correctly as no deduction on the contribution but no tax on withdrawal there, like a Roth.
This is correct, but it is only applicable to NJ state taxes; you still get a federal tax benefit which makes the 457 plan worth using. (And if you switch employers, you can roll the 457 to an IRA, convert it while still a resident of NJ, and pay state tax only on the gains.)
David Grabiner

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Re: Companies that offer governmental 457b in NJ

Post by student » Wed Nov 01, 2017 7:21 am

grabiner wrote:
Tue Oct 31, 2017 10:45 pm
student wrote:
Tue Oct 31, 2017 10:39 pm
grabiner wrote:
Tue Oct 31, 2017 10:24 pm
Note that 457b plans in NJ are not quite as desirable as in other states, because NJ does not allow a deduction for contributions. If you still live in NJ when you withdraw the money, you pay NJ tax only on the gains; if you retire in another state with an income tax, you pay state tax on the whole balance.
If I understand this correctly, this is horrible. If option 1 is contributing to a 457b plan and option 2 is contributing to an after-tax account. Since there is no deduction, the amount to invest is the same in either case. Assume both are invested in a low cost tax-efficient index fund, then option 1 has no tax on the dividend and capital gain on an yearly basis. However when one takes the money out, the gains will be taxed and I assume at the ordinary tax rate, whereas option 2 will mostly be capital gains. Without doing the math, it seems that option 1 is not much better. If one retires to another state, it will be worse. Am I understanding this correctly? This is worse than Pennsylvania, if I understand it correctly as no deduction on the contribution but no tax on withdrawal there, like a Roth.
This is correct, but it is only applicable to NJ state taxes; you still get a federal tax benefit which makes the 457 plan worth using. (And if you switch employers, you can roll the 457 to an IRA, convert it while still a resident of NJ, and pay state tax only on the gains.)
Thanks.

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