Rolling or Distribution of 457 government plans

Submitted by Brad Setterlund on Mon, 2017-08-28 23:29

I currently work for a government employer that I have been contributing money into a 457 plan. I want to either roll the entire amount into a SD401k plan or if not possible, completely take a full distribution of the funds. I am still currently employed. I was originally told by several people within the plans customer support group that I could so I setup a trust to accept the money into a SD401K plan. I then went back to make the transfer happen and they now say I can’t do this and its in violation of IRS rules. I keep getting conflicting information and they have become rude. I am curious to know if I legally can and they are stone-walling me or if in fact they gave me completely inaccurate information to begin with and really can’t? Do I have any recourse?

Thanks

Brad



Submitted by Alan - IRA critic on Tue, 2017-08-29 00:05

Are you referring to a solo 401k? Is so, what side business do you have to sponsor a solo 401k? Or possibly, do you mean a self directed IRA?

Submitted by Brad Setterlund on Tue, 2017-08-29 16:00

The 457 would be transferring to a SD401k sponsored by my own business which is separate then my real government job.  I would consider moving it into a SD IRA also.  The main thing is getting it out of a 457 as there are too many restrictions and I want to invest in real estate outside of the stock market.  I would even take the hit and do a distribution of the entire amount as I can make a higher return in 3 years above what I have lost in the taxes and penalties.

Submitted by Alan - IRA critic on Tue, 2017-08-29 17:03

Short of an unforseen emergency, you are probably not allowed a distribution or a rollover while still employed. I suspect that the first people you spoke to misunderstood your question or were not adequately trained.

Submitted by David Mertz on Tue, 2017-08-29 17:11

Correct.  Except in the case where the plan permits and specific requirements are met, including that your balance in the governmental 457(b) plan is $5,000 or less, rollover-eligible in-service distributions from the plan are not permitted until you have reached age 70½.

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