dmertz
Level 15

Retirement tax questions

One thing to be aware of.  Distributions from the 457(b) paid to you are not subject to any early-distribution penalty unless they come from a separate sub-account in the 457(b) that holds assets rolled over into the 457(b) from a qualified retirement account that was subject to early-distribution penalties on distributions paid to you.  Assets in that sub-account would be available free of early-distribution penalty if distributed after separation from service in or after the year that you reach age 55.  Rolling the money over the money over to a Roth IRA will make the amount rolled over from the traditional account in the 457(b) subject to an early-distribution penalty if distributed before the 5-year conversion holding period in the Roth IRA has been met or you reach age 59½, whichever comes first.

 

Also, if you are still working for the employer providing the 457(b) plan, in-service distributions from the 457(b) are generally not permitted before age 59½, so check with the plan.  If you still employed with this employer and the 457(b) plan includes a designated Roth account, perhaps you can do an In-plan Roth Rollover to the Roth account in the plan instead of rolling over to a Roth IRA.