Ohio Deferred Comp (ODC) is a 457b voluntary contribution retirement plan. This plan is only available for Ohio public employees. It looks and operates much like a 401k plan in the private sector.
As an Ohio public employee, you’re required to pay into one of the Ohio pension systems based on your position and certification.
Ex. Teachers pay into STRS Ohio, and police officers pay into OP&F. If you’re a state employee, you pay into OPERS.
Ohio public employees have either heard of or current contribute to the ODC 457b plan. Often, we have found that many people contribute to the plan to “save more” for retirement but don’t understand:
1) How much they should save.
2) Where they should save. Pre-tax or Roth.
3) Which investments have the most risk.
4) Why considering their tax rate today and in retirement is critical.
5) That retirement savings in the ODC and OH pension isn’t their full financial situation.
1) Ease of Use: The contribution can come directly from your paycheck.
2) It’s cheaper than the 403b offered by school districts.
1) They offer a limited choice of investment options, especially for retirees.
2) The lack of relationship: Contributors speak with an 800 number. Someone different each time.
3) ODC doesn’t understand the contributors’ full financial picture to offer them the best options for which plan they should choose, which investments are best for their total picture and optimal distribution strategy to keep taxes as low as possible.
We prefer to figure out what is best for our clients first. If ODC is the best for our clients, we then decide if pre-tax or Roth is best. Next, we decide what is the client’s best investment option and how much they should contribute.
Saving more for retirement in addition to your pension is a good thing. Let’s ensure you are contributing the correct amount into the correct plan and investments.
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