457Bmy

4 replies
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I retired from local county government last year, age 62. I have a 457b that I have yet to touch. I am trying to figure out if I should just leave the money in there until I need it or roll it over to an IRA?

Can you explain what my tax consequences will be if i withdraw the money.

Thank you

M-MTax

Level 15

You should generally leave the money in your governmental 457(b) plan until you need it, rather than rolling it over to an IRA immediately.

Governmental 457(b) plans possess a unique "superpower" that traditional IRAs or 401(k)s do not: they are entirely exempt from the IRS 10% early withdrawal penalty upon separation from service, regardless of your age. Because you retired from your county government, you can access this money right now penalty-free. If you roll the funds into a traditional IRA, you permanently forfeit this flexibility and would tie the money up under strict IRA rules.

NCperson

Level 15

the OP is over 59.5 years old.

knebell202Author

Level 1

thank you

NCperson

Level 15

since you are over 59.5 there is no 10% penalty. So that is not a consideration in your decision.

Rolling over the money to a Trad IRA may give you more investment choices than the 457(b). Generally, there is no management fee for the 457(b), but depending on where you roll the money to, there may be a management fee.

The rollover from a 457b to a Trad IRA will not create any tax implications as long as the money ends up in the Trad IRA within 60 days of its removal from the 457b.