Rolling Over 457 Plans to an IRA

If you are considering rolling over your 457 plan assets, it is crucial that you do your homework. A rollover could offer several advantages, including consolidation and access to more investment choices.

457(b) plans managed by government entities are eligible to be converted to an IRA, while those managed by nongovernmental, tax-exempt organizations have limited rollover privileges and may also have restrictions regarding when and how funds can be withdrawn from them.


A 457 plan is a tax-advantaged deferred compensation program typically provided by public sector employers. Contributions are made via payroll deduction and grow tax-deferred; you only pay taxes when withdrawing assets in retirement.

Once you retire, you have the option of rolling over your 457 plans into an IRA. Depending on your circumstances and goals, this could involve rolling them over either into a traditional or Roth IRA.

IRAs provide greater flexibility than 457 plans, offering various investment options and providing greater access to funds. You can even use an IRA fund as part of your current savings or investments, taking withdrawals at any time without incurring penalties.

For assistance with an IRA rollover, reach out to either your plan administrator or financial institution managing your account. They’ll provide all the paperwork and guidance required for making an indirect transfer effective. To maximize results, it is preferable to opt for direct rather than indirect rollover.


457 plans are tax-advantaged savings schemes available exclusively to government and certain non-profit employees. Similar to 401(k)s, but with additional features; for instance spousal rollover rules vary and community property rules might apply in some states; to ensure you make an informed decision and secure maximum benefit from these savings plans it’s wise to consult a financial professional regarding your unique situation.

Also distinguishable are 457(f) plans, available exclusively to highly compensated employees of tax-exempt organizations and operating under different rules than other 457 plans. These special plans allow participants to save extra money prior to reaching retirement age.

If you hold balances in multiple 457(b) or 457(f) accounts, considering rolling them over into an IRA may help consolidate and make them simpler to track. Furthermore, this approach may offer access to wider investment choices with lower fees associated with an IRA account.


Rules regarding 457 plans do not provide for as much flexibility as those regarding IRAs, leading to assets only being transferrable into another tax-deferred account or retirement plan, such as direct trustee-to-trustee transfers (otherwise applicable taxes will be withheld), unlike with traditional IRAs, Roth IRAs, 403(b) plans, and 401(k) plans which allow more choices of where assets can go when rolling over from government 457 plans.

Rollover may offer many advantages; however, individuals must carefully assess their specific circumstances and long-term financial goals prior to making this decision. A rollover could reduce access to certain investment options or account management fees and withdrawal flexibility, among other potential drawbacks. Furthermore, nongovernmental 457(b) plans do not fall under ERISA protection and thus could leave you exposed to creditors; an experienced financial professional should help guide you through these complex considerations for long-term success. Even whether or not you elect to roll over, regular reevaluations is crucial to long-term success!

Investment Options

Rolling over a 457 plan may alter an individual’s investment strategy significantly, including loss of access to proprietary funds or unique structures not offered through an IRA account, forcing a reassessment of retirement planning landscape and potentially multiple accounts with different sets of statements, tax documents, RMD requirements to manage.

As soon as the rollover process is completed, individuals have access to an array of investment opportunities. Diversification remains key to financial planning; an individual should carefully consider their age, risk tolerance and goals when developing their post-rollover asset allocation strategy.

Roth IRAs offer greater flexibility in savings strategies, especially as a person transitions jobs or approaches retirement. A 457 plan rollover can bring many advantages, including lower tax obligations and consolidating assets for easier management.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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