Deferred Comp vs Ira vs Roth

[Guest Irene S]

I am 28 years old and trying to figure out what the best planning strategy is for my retirement. I just changed jobs and now work for a government agency. I am in the process of rolling over my 401K from my previous employer into an IRA and then converting that into a ROTH (no 401K plan was available with my new employer). My new employer offers a 457 Deferred Compensation plan that I can contribute a max of $8000. I plan on leaving this job when I relocate in 2-5 years. I understand that with the 457 I can only roll it over into another 457 provided my next employer has such a plan.

So my question is should I contribute to the 457 or to a Roth? If I should do both which should be my priority? I can afford to contribute $400/month. Any advice is appreciated. Thanks in advance!

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Irene

[david rigby]

I'm not an expert on 457 plans (try the Government Plans Message Board), but if you can contribute $400 per month to that plan, it will dwarf the $2000 annual IRA limit, so you get to save more. Can you do both?

Remember the adage: don't put all your eggs in one basket.