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dennisconway

Rolling Over A 457

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If I have a 457 throught the only vendor provided by our district, you can bet they charge a fee. May I roll over the 457 when I retire this year?

 

If so, can I roll into my Vanguard 403-b or do I have to create an IRA rollover?

 

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Hi Dennis,

 

You are now allowed to rollover 457(b) plans (government plans) once you have retired. You may roll it over into an IRA or into a 403(b).

 

ScottyD

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Guest Chuck Yanikoski

If you are not yet age 59-1/2, though, keep in mind that after a rollover your funds will be subject to the 10% penalty, unlike 457 plan monies. If you think you will need some of the money before that age, you might consider rolling over most of the account, but making your cash withdrawal from the 457 plan.

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Chuck are you saying that if I keep the money in the rolled over IRA there will be a ten percent penalty? Or is that 10 % penalty just if I take the money out before 59 1/2?

 

I won't need the money until after I am 59 1/2. I just don't want to pay a fee to the school district vendor if the money could be rolled into Vanguard IRA for a much lower fee.

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Guest Chuck Yanikoski

Sorry -- I've been out of town the past several days.

 

There would NOT be a 10% penalty for rolling the money into an IRA. There would only be a penalty for subsequently withdrawing it from a 403b or IRA before age 59-1/2. Since 457 plans do not have the 10% penalty for early withdrawals, this could make a big difference, if you were anticipating needing the money prior to that age, and would argue for leaving at least some of your funds in the 457 plan. However, since you seem pretty confident you will not need the money early, the point is moot, and the rollover appears to be a good idea in your case.

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