457 Plan
Am I correct when I say that when an individual retires with a 457 plan the he or she can access those funds, even without a 72T investment strategy???
Am I correct when I say that when an individual retires with a 457 plan the he or she can access those funds, even without a 72T investment strategy???
Permalink Submitted by Alan Spross on Wed, 2011-03-30 20:25
Correct, there is no early withdrawal penalty from a 457 plan because these are NOT qualified plans.
That said, if the 457 plan accepts a rollover from an IRA or qualified plan, those funds must be accounted for separately and if they are distributed, the penalty on these other funds applies until the employee is either 55 under the age 55 separation exception or age 59.5 if the age 55 exception does not apply.
Permalink Submitted by Eric Woodfill on Thu, 2011-03-31 00:41
So if a 457 plan is not a qualified plan then you would not be able to roll those assets into an IRA. Continuing that train of thought if you rolled the funds out of the 457 plan one would roll those assets into a non-qualified account??
Permalink Submitted by Alan Spross on Thu, 2011-03-31 00:53
A government 457 plan can be rolled to an IRA even though it is a non qualified plan, but a non govt 457 plan cannot.
You cannot roll a non govt 457 plan into any other plan, qualified or non qualified. Distributions would be taxable.
Here is a rollover chart for most plans, note the difference between a govt 457b and a non govt plan:
http://www.mhco.com/Library/Articles/2008/ARoll_Chart_011008.html
Neither type of 457 has an early distribution penalty since both are non qualified. Note that my earlier post referred to rollovers INTO the 457 plan, not FROM the 457.
Permalink Submitted by Eric Woodfill on Thu, 2011-03-31 01:07
thank you