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trafman

Ex-spouse 457

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I recently received a portion of my ex's 457 plan. I am not yet 59, am retired, and am wondering if I can withdraw money without the 10% penalty on my "new" money. Also which rules apply if I move some or all of the money to a rollover IRA?

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457 distributions are exempt from the Internal Revenue Code (IRC) Section 72(t) 10% tax penalty that a participant under the age of 59½ may be suject to if a distribution was made from a qualified plan, like a 401(k). Although 457 plans are typically not subject to the Retirement Income Security Act (ERISA), many 457 plans will honor the Qualified Domestic Relations Order (QDRO) that is found only in ERISA. If you are an Alternate Payee of a QDRO as defined in IRC Section 414(p), then you should be able to move some or all of the money to a rollover IRA. However, it still may depend on whether the 457 administrator will allow you (the Alternate Payee) to distribute QDRO account (cash or rollover) prior to the attainment of the earliest retirement age as found in IRC Section 414(p)(4)(B). The earliest retirement age is defined as – "the earlier of:

• The date on which the participant is entitled to a distribution under the plan, or

• The later of (I) the date the participant attains age 50, or

• The earliest date on which the participant could begin receiving benefits under the plan if the participant separated from service."

 

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