MNDCP 457 Self-Directed Brokerage Account

investment management choices for your Minnesota Deferred Compensation Plan

If you work for the State of Minnesota, a city, county, or another participating public employer, your Minnesota Deferred Compensation Plan may be one of your most important retirement savings tools.

Many public employees know they have a 457 plan. Fewer realize that the MNDCP may also offer access to a self-directed brokerage account through the Schwab Personal Choice Retirement Account®, or PCRA.

According to the MNDCP self-directed brokerage guide, the PCRA allows participants to select from thousands of publicly traded mutual funds and ETFs in addition to the plan’s core investment options. The guide also notes that individual securities such as stocks, bonds, and options are not available through the PCRA.

For the right person, this may create an opportunity to have part of your 457 account have additional investment choices and / or professionally managed investments as part of your full retirement plan.

Why consider the self-directed brokerage option?

The core MNDCP investment lineup may be enough for many participants. But some Minnesota public employees want more flexibility, especially as retirement gets closer.

A professionally managed self-directed brokerage account may help coordinate your 457 plan with:

• PERA, MSRS, or TRA pension income
• Social Security timing
• Pre-tax and Roth 457 contributions
• IRA and Roth IRA accounts
• Retirement income withdrawals
• Minnesota and federal tax planning
• Investment risk before and after retirement
  

The goal is not simply to add more investment choices. The goal is to make sure your 457 account has a clear job inside your retirement plan.

Who may be a good fit?

This may be worth reviewing if you:

• Are within 10 years of retirement
• Have a meaningful MNDCP 457 balance
• Want professional investment management
• Want more investment flexibility than the core lineup provides
• Need your 457 coordinated with your pension, Social Security, and tax plan
• Prefer a retirement income strategy instead of managing investments on your own

The MNDCP guide states that a brokerage account is intended for knowledgeable investors who understand the risks and costs associated with investing, and that participants are responsible for determining the suitability of the funds they select.

Important cost and plan considerations

The self-directed brokerage option is not automatically better for every participant.

The MNDCP guide notes that there is an additional annual administrative fee of $30, charged at $2.50 per month, for using the Schwab PCRA. Additional fees may also apply depending on trading activity.

Before using the PCRA, it is important to understand the costs, investment options, plan rules, and how this account fits into your overall retirement plan.

MNDCP : Self-directed Brokerage Account Option | Minnesota State Retirement System (MSRS)

Guide to the Self Direct Brokerage Account Option : Self Directed Brokerage Account Guide

Schedule a MNDCP 457 review

Your deferred compensation account should not be managed in isolation.

At Mullins Financial, we help Minnesota public employees coordinate their pension, 457 plan, Social Security, taxes, retirement income, and investment strategy through the CLARITY Retirement Method™.