Many FRS members also have 457(b), 403(b), IRA, or deferred compensation accounts. We help you understand how those accounts fit with your pension, DROP, Social Security, taxes, and retirement income plan.
Independent fiduciary guidance · Educational planning · Not affiliated with or endorsed by FRS
If you’ve worked for a Florida public employer for more than a few years, you may have more than one retirement account quietly sitting in the background — perhaps a 457(b) deferred compensation plan, a 403(b) from a school district or university, or an old account from a previous public-sector job. These accounts often don’t get the same attention as the FRS pension, but they can play a meaningful role in your retirement income picture. Reviewing them carefully — well before you retire — is one of the more valuable planning steps an FRS member can take.
A 457(b) is a deferred compensation retirement plan generally offered to state and local government employees, including many Florida state, county, and municipal workers. Contributions are typically made on a pre-tax basis (with Roth options available in some plans), and the account grows tax-deferred until withdrawn.
One feature that makes governmental 457(b) plans distinctive: withdrawals after separation from service generally are not subject to the additional 10% federal early withdrawal penalty that applies to many other retirement accounts before age 59½. That rule has planning implications for public employees who retire earlier than the typical private-sector retirement age. Specific rules should be confirmed with your plan provider or a qualified tax professional before relying on them in planning.
A 403(b) is a retirement savings plan generally offered to employees of public schools, certain nonprofit organizations, and some healthcare employers. Many Florida teachers and school district staff have 403(b) accounts available through their employer. The plan functions similarly to a 401(k) in many respects — pre-tax contributions, tax-deferred growth, and rules around withdrawals and distributions.
403(b) plans often offer a menu of investment options that varies by employer and vendor. The investment lineup, the fees charged, and the contract structure can vary widely from one plan to another, which is one reason periodic review is worth the time.
While the two plans share similarities, they differ in several ways that matter for planning:
Specific rules and limits change over time and are governed by IRS and plan-level regulations. Current details should be confirmed with your plan provider.
Public employee retirement plans vary widely in quality. Some plan menus offer low-cost, well-diversified investment options. Others — particularly some 403(b) plans sold through commission-based vendors — can carry surrender charges, layered fees, or investment options that may not align well with a long-term retirement plan. Reviewing what’s actually inside the account is a worthwhile exercise.
Common review questions include:
For most public employees, a 457(b) or 403(b) is a supplemental account that sits alongside — not instead of — FRS benefits. The FRS Pension Plan (or Investment Plan, depending on your election) handles one part of retirement income. Social Security covers another part for most members. Personal savings, IRAs, and any 457(b) or 403(b) balances make up the rest.
The planning question is how those pieces work together. Which account should you draw from first? How does a 457(b) balance affect your tax picture in early retirement? Should you continue contributing to a 403(b) during your last working years, or shift elsewhere? These are questions a coordinated review can help organize.
Many public employees accumulate retirement accounts across multiple employers, plan vendors, and years. It’s not unusual to discover, in a pre-retirement review, an old 403(b) from a school district fifteen years ago, an IRA that was never consolidated, or a 457(b) from a previous county employer. Each of these accounts has its own investment lineup, fee structure, and beneficiary designation.
Reviewing what you have — and deciding what, if anything, to consolidate — is generally easier to do before retirement than after. Consolidation isn’t always the right answer; sometimes leaving an account where it is makes sense for tax, investment-option, or feature reasons. The point is to make those decisions intentionally rather than by default.
At separation from service, retirees often have the option to roll a 457(b) or 403(b) balance to an IRA or to another eligible retirement account. A rollover is not automatically the right choice. The decision should be reviewed based on several factors, including:
We help clients review these factors so the rollover question is answered intentionally — not as a default, and not under pressure.
An introductory review is a no-pressure way to look at what you have, what it costs, and how it fits with your full retirement plan.
Educational review of your 457(b), 403(b), and other supplemental retirement accounts alongside your FRS benefits.
Review what you have — 457(b), 403(b), IRA, and other retirement accounts — in one picture.
Look at how your existing accounts are invested and whether the mix fits your goals.
Identify visible and less visible fees inside your current retirement accounts.
Discuss whether the risk level in your current accounts aligns with your time horizon.
Walk through the considerations involved in any potential rollover decision.
Think through which accounts to draw from, when, and in what order during retirement.
Review supplemental accounts well before your planned retirement date.
Coordinate 457(b) and 403(b) balances with pension, Social Security, and other income.
Common questions about 457(b), 403(b), and supplemental retirement accounts.
A 457(b) is a deferred compensation retirement plan generally offered to state and local government employees. Contributions are typically made pre-tax (with Roth options sometimes available), and the account grows tax-deferred until withdrawn. 457(b) plans have specific withdrawal and distribution rules that differ from 401(k) and 403(b) plans.
A 403(b) is a retirement savings plan generally offered to employees of public schools, certain nonprofits, and some healthcare organizations. It functions similarly to a 401(k) but has its own contribution and distribution rules. Many Florida teachers and school district employees have 403(b) accounts.
They differ in several ways, including the rules around early withdrawals, the types of employers that offer them, and how contributions and rollovers are treated. Some public employees are eligible for both. We help clients understand which type they have and how it fits their plan.
A rollover is not automatically the right choice. Investment options, fees, withdrawal access, tax considerations, account features, and individual goals should all be reviewed. In some cases, leaving an account where it is may be the better option.
Yes. We review allocation, fees, investment options, risk level, beneficiary designations, and how the account coordinates with your other retirement resources.
Many Florida educators have access to a 403(b) plan through their school district. Plan menus, vendors, and fee structures vary widely, which is one reason periodic review can be helpful.
Many Florida state, county, and municipal employees are offered a 457(b) deferred compensation plan in addition to their FRS membership. Whether to participate, and how much to contribute, are personal decisions.
The 457(b) or 403(b) is generally separate from the FRS pension and is owned by the employee. These accounts often serve as a supplemental retirement resource alongside pension income. We help clients see how all the pieces fit together.
No. Benowitz Wealth Management does not provide tax or legal advice. We coordinate with qualified tax professionals when tax-specific questions arise.
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This checklist is designed to help Florida public employees organize key questions around FRS benefits, DROP, pension income, retirement accounts, taxes, healthcare, Social Security, Medicare, and long-term retirement planning.
Related planning resources for FRS members and Florida public employees.
Understand your FRS Pension and DROP options before, during, and after retirement.
Coordinate pension, Social Security, and investment accounts into a retirement income plan.
Organize tax, beneficiary, and estate questions around retirement decisions.
Plan Medicare, HIS, and retiree health coverage before retirement.
Planning considerations specific to Special Risk law enforcement members.
Planning considerations specific to Special Risk fire service members.
Planning considerations for Florida educators with FRS and 403(b) accounts.
Retirement planning considerations for Florida state employees.
Retirement planning considerations for Florida county employees.
Independent fiduciary planning for Florida public employees. Educational conversations. No pressure.
Disclaimer: Benowitz Wealth Management is an independent registered investment adviser. This content is for educational purposes only and should not be considered personalized investment, tax, insurance, or legal advice. Benowitz Wealth Management is not affiliated with, endorsed by, or sponsored by the Florida Retirement System, the State of Florida, any county government, city government, school district, public employer, or public agency. FRS rules, benefits, and retirement options may change. Please consult the appropriate agency, tax professional, insurance professional, or legal professional before making decisions regarding your benefits or retirement plan.
