| What Happens to Your 457(b) If You Leave Your Employer |
- Assets may be transferred to your new employer's plan if permitted by that plan.
- Assets may be moved to a rollover IRA at an institution of your choice. This will permit the money to continue to grow tax-deferred.
- You may leave the money in your current plan and continue to enjoy tax-deferred growth. If your account has less than $5,000, you may be required to transfer assets. Check with your employer for details.
- You may take a lump sum distribution. Unlike the 403(b), there is no 10 percent early withdrawal penalty for withdrawing 457(b) money upon separation of service. Withdrawals will be taxed as ordinary income.
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| What Happens to Your 457(b) If You Become Disabled |
| Unlike the 403(b), disability itself is not a distributable event. However, it may be considered an unforeseeable event and you may be able to withdraw money, subject to certain rules and restrictions. Check with your employer and vendor for details. |
| What Happens to Your 457(b) in the Event of a Divorce |
Some or all of the balance in your 457(b) account may be transferred. Distribution to an alternate payee will be permitted if it is made pursuant to a qualified domestic relations order (QDRO). This is a decree, judgment, or order that meets the qualification requirements of the Internal Revenue Code. Those requirements include the following:
- It must have been issued under a state's community property or other domestic relations law.
- It must relate to the provision of alimony, child support, or the property rights of a spouse, former spouse, child, or other dependent (alternate payee).
- It must assign to the alternate payee the right to receive all or a portion of the participant's plan benefits.
- It must clearly specify (1) the names and addresses of each alternate payee,
(2) the amount or percentage of the participant's benefit to be paid to each alternate payee,
(3) the period of time over which the order applies,
and (4) each plan to which the order applies.
When discussing property distribution in contemplation of a divorce, you should make certain that your attorney ensures that the distribution of your 457(b) assets and all other retirement plan assets meet the requirements of a QDRO. |
| What Happens to Your 457(b) in the Event of Death |
| Death benefits are paid to a beneficiary or beneficiaries
on file with your vendor. How the proceeds are distributed depends upon the age of the participant upon death and beneficiary's relationship to you. You should
review your beneficiary designations annually and update them as necessary through your 457(b) vendor. |
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457(b) Basics »
Contribution Limits »
Products and Vendors »
Cost to Invest in a 457(b) »
Modifying Contributions » |
Accessing 457(b) Savings »
Other Changes to Your 457(b)
Buying Service Credit »
Contribute to a 457(b)
and a 403(b) » |
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