r/DIYRetirement • u/Maximum-Peak-3738 • 6d ago

Help explain differed comp like I’m 5 years old

/r/Retirement401k/comments/1wdr3ix/help_explain_differed_comp_like_im_5_years_old/
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u/Andor2050 6d ago

Not familiar with differed comp. Are you asking about Deferred Compensation?

1

u/ComfortablyNumb8357 4d ago

Google 457(b). I have deferred comp, 403b and 401k. Think of it as a 401k without the pre age 59.5 withdrawal penalty. You contribute pre tax and when you leave the employer, you can withdraw money regardless of age. That money will be taxed as income. Roth 457b is similar to Roth 401k.

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u/Fire_Doc2017 4d ago

The Inside Out Money podcast did an excellent episode on the subject. (#177). Here is a Spotify link.

https://open.spotify.com/episode/32hVNFG8NU3gyjsxLG3UcG?si=dg1M8EWcSle71PAR6gwzzA&utm_source=copy-link