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What Options For My 457b After Leaving A Non Profit?

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I have reviewed by 457b Plan Restrictions

Plans for these non-governmental entities are much more restrictive than governmental plans. For example, money deferred into these plans cannot be rolled over into any other type of tax-deferred retirement plan - only another non-governmental 457 plan. In addition, the money placed into these accounts is not held in a trust for the sole benefit of the employee that makes the deferral. Instead the money remains the property of the employer and therefore is available to creditors.

 

I left my postion at my non profit and not currently employed by a non profit to be able to rollover to another 457b. What options are available to me in regard to my 457b?? Can I do anything?

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I have reviewed by 457b Plan Restrictions

Plans for these non-governmental entities are much more restrictive than governmental plans. For example, money deferred into these plans cannot be rolled over into any other type of tax-deferred retirement plan - only another non-governmental 457 plan. In addition, the money placed into these accounts is not held in a trust for the sole benefit of the employee that makes the deferral. Instead the money remains the property of the employer and therefore is available to creditors.

 

I left my postion at my non profit and not currently employed by a non profit to be able to rollover to another 457b. What options are available to me in regard to my 457b?? Can I do anything?

 

 

none other than to take the distribution as taxable income or leave it with your former employer.

 

 

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I have reviewed by 457b Plan Restrictions

Plans for these non-governmental entities are much more restrictive than governmental plans. For example, money deferred into these plans cannot be rolled over into any other type of tax-deferred retirement plan - only another non-governmental 457 plan. In addition, the money placed into these accounts is not held in a trust for the sole benefit of the employee that makes the deferral. Instead the money remains the property of the employer and therefore is available to creditors.

 

I left my postion at my non profit and not currently employed by a non profit to be able to rollover to another 457b. What options are available to me in regard to my 457b?? Can I do anything?

 

 

none other than to take the distribution as taxable income or leave it with your former employer.

 

 

 

 

 

 

I have reviewed by 457b Plan Restrictions

Plans for these non-governmental entities are much more restrictive than governmental plans. For example, money deferred into these plans cannot be rolled over into any other type of tax-deferred retirement plan - only another non-governmental 457 plan. In addition, the money placed into these accounts is not held in a trust for the sole benefit of the employee that makes the deferral. Instead the money remains the property of the employer and therefore is available to creditors.

 

I left my postion at my non profit and not currently employed by a non profit to be able to rollover to another 457b. What options are available to me in regard to my 457b?? Can I do anything?

 

 

none other than to take the distribution as taxable income or leave it with your former employer.

 

 

 

Could this above answer be correct? I thought you were required to take a nonprofit (nongovernmental) 457(b) distribution within 60 days of terminating employment.

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Please, would someone clarify this for me... I read that you cannot roll over a 457b unless it is into another 457b plan. I also read above that you can either leave it with the employer or take it as taxable income upon termination of employment. My current employer claims that unless they approve an unforeseen emergency that no one, absolutely no one can withdraw their money until retirement age 65. My question is, is that correct and legal? I really need to know whether or not I can withdraw my funds, and I don't trust what they say at all. On the other hand, I know that these plans are written by the employer, so can they really keep people from rolling over or withdrawing funds until age 65??? I have lots of other questions too, like how gains/losses should be tracked for each plan participant. Should the total percentage gain of the investment be shared equally among all, no matter how long they have been in the plan, or should each person have their own account? All of this record keeping is done in-house and I don't think it is right. Also, is it legal to keep our withholdings in a temporary savings account instead of investing them just because the market is losing? Thanks for reading and your assistance!

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Please, would someone clarify this for me... I read that you cannot roll over a 457b unless it is into another 457b plan. I also read above that you can either leave it with the employer or take it as taxable income upon termination of employment. My current employer claims that unless they approve an unforeseen emergency that no one, absolutely no one can withdraw their money until retirement age 65. My question is, is that correct and legal? I really need to know whether or not I can withdraw my funds, and I don't trust what they say at all. On the other hand, I know that these plans are written by the employer, so can they really keep people from rolling over or withdrawing funds until age 65??? I have lots of other questions too, like how gains/losses should be tracked for each plan participant. Should the total percentage gain of the investment be shared equally among all, no matter how long they have been in the plan, or should each person have their own account? All of this record keeping is done in-house and I don't think it is right. Also, is it legal to keep our withholdings in a temporary savings account instead of investing them just because the market is losing? Thanks for reading and your assistance!

 

 

457b plans of non profit employers can only be transferred to a 457b plan of another non profit organization

and canot be rolled over to an IRA. Employers can impose restrictions on when the benefits are payable such as age 65. You need to check the plan document or SPD to determine when the benefits may be distributed. Investment of plan assets will be described in the plan document.

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Please, would someone clarify this for me... I read that you cannot roll over a 457b unless it is into another 457b plan. I also read above that you can either leave it with the employer or take it as taxable income upon termination of employment. My current employer claims that unless they approve an unforeseen emergency that no one, absolutely no one can withdraw their money until retirement age 65. My question is, is that correct and legal? I really need to know whether or not I can withdraw my funds, and I don't trust what they say at all. On the other hand, I know that these plans are written by the employer, so can they really keep people from rolling over or withdrawing funds until age 65??? I have lots of other questions too, like how gains/losses should be tracked for each plan participant. Should the total percentage gain of the investment be shared equally among all, no matter how long they have been in the plan, or should each person have their own account? All of this record keeping is done in-house and I don't think it is right. Also, is it legal to keep our withholdings in a temporary savings account instead of investing them just because the market is losing? Thanks for reading and your assistance!

 

 

457b plans of non profit employers can only be transferred to a 457b plan of another non profit organization

and canot be rolled over to an IRA. Employers can impose restrictions on when the benefits are payable such as age 65. You need to check the plan document or SPD to determine when the benefits may be distributed. Investment of plan assets will be described in the plan document.

 

 

Thanks, so it seems that when I leave, my funds will stay here until I'm 65. It just doesn't seem right that so much authority is handed to the employer. I was never informed of all this, or I wouldn't have put any of my own money into it!

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Thanks, so it seems that when I leave, my funds will stay here until I'm 65. It just doesn't seem right that so much authority is handed to the employer. I was never informed of all this, or I wouldn't have put any of my own money into it!

 

 

You have a right to get your questions answered about your account and how its run. Given the nature of 457b plans (or all tax deferred retirement plans, 403b, 401k, I am not sure why you would care that the employer has the authority, unless you are getting the run around. At my district, you can come to a 457b oversight committee meeting and get your questions answered thoroughly. I don't understand why your employer is giving you a hard time. As intruder suggested, get the plan document and find out what you can do.

LAUSD employees have choices within the 457b plan, Vanguard funds, bond funds, international funds and a stable value with an open window to Charles Schwab hundreds of funds. And the costs on some of these funds are fair. When you retire, you can do what you wish with the money that you saved. Thats a good thing. Remember so many of our colleagues have nothing saved, thats not good at all.

2 cents,

Steve

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Its important for employees of non-profit organizations offering 457(b) plans to understand that these are deferred comp plans, not retirement plans. The employer 'owns' the contributions, and although unlikely, the employee could lose the contributions if the employer files for bankruptcy. These plans are also not covered under the new fee disclosure law. So if the plan was assessing large and hard to find fees and charges, it will likely continue to do so.

 

Unfortunately, this kind of information is often not made available to employees.

 

BruceM

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you can leave the funds with the employer and take the risk that the funds will be seized by the employer's creditors or take a distribution and pay taxes on it. I would not leave the funds with the employer.

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Its important for employees of non-profit organizations offering 457(b) plans to understand that these are deferred comp plans, not retirement plans. The employer 'owns' the contributions, and although unlikely, the employee could lose the contributions if the employer files for bankruptcy. These plans are also not covered under the new fee disclosure law. So if the plan was assessing large and hard to find fees and charges, it will likely continue to do so.

 

Unfortunately, this kind of information is often not made available to employees.

 

BruceM

 

 

You post is probably right for most employer plans but not LAUSD. Our committee has required the TPA to disclose all frees to all participants at every presentation. Laws can be passed but that does not guarantee that fees will be disclosed.

You are absolutely right, financial institutions will hardly do the right thing and voluntarily disclose how they are paid. But all employers can require that the TPA disclose fees.

Steve

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It may be important to note that one cannot (usually) just "leave the funds with the employer" without making a written election to actually do so. The exception would be a 457(b) plan that is specifically written to not allow any payments until a later age (such as age 65), allowing no options to be paid early (very rare to see this).

 

So, you need to be careful to follow the procedure for delaying the receipt of the funds if you want to avoid immediate taxation. The plan will spell out how long you have to make a written election to delay the taxation of your benefits. If you do nothing by the time that deadline, then it is too late to delay and the amount is taxable and payable in whatever default form of payment that the plan requires.

 

To delay, you need to spell out the later date by which you really do want the payment to be made. You will not be able to accelerate that date.

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Guest Joel Frank

Assume the employer will remain viable and you have de minimus cost investment options why not leave the account as is and take Required Minimum Distributions at age 70-1/2?

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Okay, the point I am struggling to make here is perhaps just one of perception or of semantics. When I read "just leave the funds with the employer", I think of a participant doing nothing at all, and thus the funds stay with the employer. Well, that is how it can work in a 401(k) plan, a 403(b) plan, a profit sharing plan, a governemnt 457(b), etc. but it does not quite work that way with a non-profit corporation 457(b) plan, they way I see it. I am concerned over the taxable event.

 

The non-profit company 457(b) documents (those I've seen) require a written election by the participant to spell out a later date (to delay the benefit until then), in order to avoid current taxation of the benefit. Thus, if the former employee does not make a written election to delay the taxation to a later date by the deadline listed in the plan, then they get a W-2 with a 457(b) amount as taxable.

 

Are you suggesting that the participant make no written election, somehow pay the taxes on the benefit now, but still leave the funds in the plan? If so, I had not considered that, but I don't know what a "deminimis cost investment option" is.

 

edited to add an important "not" in the second paragraph, 2nd sentence

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Guest Joel Frank

Okay, the point I am struggling to make here is perhaps just one of perception or of semantics. When I read "just leave the funds with the employer", I think of a participant doing nothing at all, and thus the funds stay with the employer. Well, that is how it can work in a 401(k) plan, a 403(b) plan, a profit sharing plan, a governemnt 457(b), etc. but it does not quite work that way with a non-profit corporation 457(b) plan, they way I see it. I am concerned over the taxable event.

 

The non-profit company 457(b) documents (those I've seen) require a written election by the participant to spell out a later date (to delay the benefit until then), in order to avoid current taxation of the benefit. Thus, if the former employee does make a written election to delay the taxation to a later date by the deadline listed in the plan, then they get a W-2 with a 457(b) amount as taxable.

 

Are you suggesting that the participant make no written election, somehow pay the taxes on the benefit now, but still leave the funds in the plan? If so, I had not considered that, but I don't know what a "deminimis cost investment option" is.

 

 

I think you left out the word "not" in the second sentence of your second paragraph. My position to delay to age 70.5 assumes that the ex makes a timely and properly executed form to delay until age 70.5

 

A de minimus cost plan is one that charges its worker-investor a fee so low that it has very little impact on the growth of one's money:

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