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FeliciaH97

Unforeseeable Emergency

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Are there any restrictions on assets that can be used for unforeseen emergencies? For example, can earnings on employer and employee contributions be used? Employer contributions?

 

Is there any reason to tract employer and employee contributions separately?

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Is this for a governmental 457(b) or non-governmental Top Hat 457(b)? In either case I’m not aware of any restrictions on the assets for an unforeseeable emergency distribution.

 

The funding of the 457(b) plan with both employee & employer is not typical with governmental 457(b) plans since both types of contributions counts towards the annual 457(b) limit (i.e. $16,500). In cases where the governmental entity expects to match the employee 457 deferral amounts (or make other discretionary contributions) a 401(a) plan is often set-up to avoid any problems with the annual 457(b) limit.

 

As a result, it may actually be a good idea to commingle the employee and employer contributions unless the employer contributions are also subject to vesting. Also, if this is a governmental 457(b) that allows rollovers, rollovers from other eligible retirement plans need to be tracked separately. 457(b) is not subject to any 10% premature withdrawal excise tax prior to age 59½ but rollovers from other qualified retirement plans and traditional IRAs would be.

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