Hi,

I have the opportunity to begin contributing to a 457 plan. I currently max out my 403b (15K) and traditional IRA (4K). I would like to max out the 457 as well, but have been told this money may be seized if my employer goes bankrupt. I work at the Mayo Clinic, so I do not anticipate this happening, but I suppose one can never be absolutely sure. Is this a small enough risk that you would advise contributing to a 457 plan? Thank you very much!

Zip Code: 55901

457 Plans are actually deferred compensation plans instead of a retirement savings plan. While you work, you can elect to set aside a portion of your salary pre-tax, and that money grows tax-deferred.

The issue with these plans, as you mentioned, is that your 457 account is considered an asset of the Hospital, and is subject to their creditors.

What's the risk of actually losing any of your investments? Who knows? But consider this, if a lot of doctors are participating in the 457 plan, and the only way they can get at their 457 money is to terminate their employment at the hospital, imagine the mass exodus if word gets out that the hospital is in trouble. The hospital would need to do what it could to avoid that scenario.

That being said, the closer you are to retirement, the more sense contributing to a 457 plan makes, since you have a pretty good idea that, in the short term, the Mayo Clinic isn't going to fold.

Zip Code: 01801