Transferring a 457(b) to an IRA

Can I transfer a 457b to an IRA

Transferring a 457(b) into an IRA involves several steps and requires an in-depth knowledge of rollover rules and tax implications, but also allows you to consolidate retirement savings while expanding investment options.

Nongovernmental 457(b) accounts can typically be converted to most types of IRAs; however, you cannot convert a governmental account.

Tax-deferred growth

A 457(b) retirement account provides savers with an effective and tax-efficient means to build their nest egg for retirement. Similar to Roth IRAs, 457(b)s provide tax-deferred growth on investments – although they are only open to state and local government employees, police officers, firefighters, teachers, university employees and some nonprofits. Furthermore, these plans tend to offer less investment choices than their 401(k) counterparts.

Non-governmental plans are administered by employers rather than independent trustees, providing some protection from creditors; but your funds may become at risk should the employer become bankrupt or become insolvent.

As is true with 401(k) and 403(b) accounts, when you reach age 70.5 it’s time to begin taking required minimum distributions (RMDs). This can be cumbersome and confusing when dealing with multiple savings vehicles; therefore transferring them into an IRA may help you better control RMDs and avoid unnecessary penalties or taxes incurred from multiple savings vehicles. Furthermore, your employer may even permit this while still working at their company!

Tax-free withdrawals

Rollover IRAs provide increased flexibility and investment options while streamlining financial planning by consolidating assets. Transferring them can also lower fees that erode retirement savings; but before undertaking such an endeavor it’s crucial that one understands each savings account’s rules before proceeding with a rollover.

457(b) plans are offered by public sector employers and allow employees to save pre-tax, similar to 401(k), but these accounts do not protect against creditors as 401(k). Furthermore, withdrawals from 457(b)s may be subject to different rules than with traditional retirement savings plans.

Employees typically can access funds in their 457(b) in the event of financial hardship or when retiring – unlike with 401(k) plans that often permit early withdrawals for specific reasons. Each year you may withdraw an annual maximum and any money taken out must be rolled over within 60 days or it will be treated as an early distribution and incur applicable penalties.

Employer match

457(b) plans are retirement savings vehicles designed for government employees and certain tax-exempt non-profit employers to make pre-tax contributions towards their retirement savings. While similar to 401(k) and 403(b) plans, 457(b)s offer some distinct differences: such as being able to rollover your funds into an IRA – something which can help consolidate savings, facilitate financial planning, and potentially access more investment options.

Rollover assets from a non-governmental 457(b) plan into an IRA is possible if allowed by your employer; withdrawals will then be taxed and may incur 10% early withdrawal penalties if taken out before age 59.5 – although you could potentially take penalty-free distributions once retired or changed jobs have taken place. Non-governmental plans usually tax withdrawals at ordinary income rates.


Although 457(b) plans offer limited investment choices, they still represent an effective means of saving for retirement. While not as flexible as 401(k)s due to not receiving Employee Retirement Income Security Act protections like workers do with an IRA account. Furthermore, any savings placed within non-governmental 457(b) plans could become vulnerable should their sponsoring company experience financial issues that pose potential threats against creditors.

Conversely, government 457(b) plans are protected from creditors and allow employees to access funds at any time after leaving employment (subject to certain restrictions), with possible loans available depending on plan rules.

Fees associated with 457(b) accounts depend upon both their provider and size of account, with larger plans having more power to negotiate fees negotiated more easily by plan providers; they might even employ on-site education representatives to educate employees about benefits; however, this can increase costs to participants.

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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