457(b) retirement fund or a high yealed Saving Account
Terry, I’m a73 year old retired city of Chicago employee with a fixed 457 (b)defered comp account through the City of Chicago that is getting about 2.50% interest. I have roughly $175,000.00 in the account. Would I be better off taking the money out of the account and putting it in a high yeald saving account.
Thank you for your help.
Terry Says
When you withdraw from the deferred comp program, you will pay ordinary income taxes on the withdrawal. So figure about 25% of the money will go to the government in taxes! And that withdrawal will increase your income — and if you’re on Medicare it will likely increase your Medicare Part B and D premiums. (not sure what you are using for health insurance).
So this is not a great tradeoff. Rates are falling now anyway. I’d leave the money where it is until you really needit.
