Retirement withdrawal (457b)

[cjlf87]

I rolled over about 33k from former employer retirement plans into a new 457 b acct. The new acct has had about 9k of contributions from new employer. So there is roughly 43k in the acct. I want to withdraw the 33k that I rolled over for new home purchase. I am having a hard time understanding the rules surrounding separation from service. Should I still be able to withdraw those funds since I no longer work for those companies, or does the rolling over of funds now void that opportunity? 

[dmertz]

This is a question for your 457(b) plan administrator.  I suspect that you'll find that the exception to the early-distribution penalty for separation from service in or after the year you reach age 55  (or age 50 for public safety employees) only applies to a distribution from the plan of the employer from which service was separated and once rolled over the 457(b) that exception no longer applies.  Such amounts rolled over to the 457(b) and the earnings thereon are required to be tracked separately from the other 457(b) contributions and earnings so that any early-distribution penalty can correctly be applied to distributions of the rolled-over amounts, but I doubt that your age at separation from service with the previous employer is known or tracked by the 457(b).

The 457(b) might also have restrictions on obtaining any in-service distributions at all before age 59½.

[Opus 17]

If you had left the money from employer 1 in employer 1's plan, you would be allowed to withdraw it after separating from service (subject to regular income tax plus a 10% penalty.) 

However, by rolling over the money into the new plan, I suspect it becomes all part of the new plan's funds and is subject to the rules of the new plan only.  They might allow withdrawals (but I suspect not) or they might allow a hardship withdrawal (but does this count as a hardship?). 

Also, note that a withdrawal from a qualified workplace plan is not eligible for the first time home buyer exception to the 10% penalty.  You would have had to rollover the money from the workplace plan into an IRA and then withdraw from the IRA for the home in order to get the penalty exception.  If you are successful in withdrawing money from the present plan, it will be subject to regular income tax plus a 10% penalty. 

[NCperson]

@cjlf87 how old are you?  if you are over 59.5 years old. there is no 10% penalty.