Can I Transfer My 457 to a Roth IRA?

The 457, commonly referred to as a deferred compensation plan, is a retirement savings account offered by government entities and some non-governmental (non-profit) organizations that allows employees to save pre-tax or after-tax amounts for retirement savings purposes.

Dependent upon the type of 457 plan you own, rolling over assets into an IRA may provide several advantages – consolidating retirement savings while expanding options available to you as an investor.

Tax-Free Withdrawals

A 457 plan is a type of tax-deferred retirement account provided to state and local government employees as well as some non-profit organizations. With a traditional 457, earnings grow tax-free until you withdraw them upon retirement when they will be taxed as ordinary income. Your employer can also include a Roth option that lets you invest after-tax dollars that grow tax free until withdrawing them at which point they become subject to regular income taxes.

Once you reach age 72, both governmental and non-governmental 457 plans must comply with required minimum distribution rules, meaning you must begin taking RMDs from these accounts or incur penalties. If your tax rate will not increase upon retirement, moving your 457 account into a Roth IRA could help minimize taxes in later life by converting pre-tax money without incurring an early withdrawal penalty – giving you more control of future tax costs!


Like 401(k), 457 plans allow employees to defer income taxes on retirement savings until withdrawal at retirement age. Unlike an IRA, however, participation in 457 plans must come through your employer rather than independently opening an account to participate.

Participants typically contribute a percentage of their paycheck to a 457 plan and choose how to invest it from among various options available. Some employers may even match contributions.

One key difference between a 457 plan and an IRA is that employer contributions don’t vest until after two full years with your employer, although vesting schedules can differ depending on policies of both accounts. When considering rolling over into Roth IRA, this distinction must be kept in mind.


A 457(b) deferred compensation plan is a tax-advantaged retirement savings account offered to some state and local governments as well as non-governmental (non-profit) organizations for employees to contribute toward. Employee contributions are made pre-tax to reduce taxable income; once funds are withdrawn they become subject to regular income taxes; some plans feature Roth contributions that grow tax free until withdrawal occurs; more information on Roth options here.

457(b) plans differ from other retirement accounts by having no required minimum distribution (RMD) rules; you can keep the money in your account until age 72 versus an IRA that must comply with RMD rules starting at age 70 1/2.

As mentioned previously, IRAs often feature lower administrative and management fees than 457(b) plans, so it may be worthwhile to carefully consider both when considering a rollover. It will allow you to get the advice that best meets your individual circumstances.

Expert Advice

Even though both 457s and IRAs provide similar benefits (money contributed reduces taxable income while withdrawals are tax-free), each account comes with its own set of advantages – it’s therefore essential to discuss your specific circumstances and retirement goals with an expert financial professional before making your choice.

Under the rules of your plan, you may be eligible to transfer the assets in your 457(b) plan to any type of retirement account of your choice – although for optimal results it’s best done while in service using an “in-service rollover.”

Rollovers must be handled carefully to avoid taxes and penalties that might cancel out their benefits of consolidation. Even transfer fees might seem minor at first glance; but over time they could significantly erode returns. That is why considering an IRA with lower administrative and management fees may help boost savings over the long term while avoiding unnecessary tax penalties if needing access before age 59 1/2.

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