What Happens to a 457b After Leaving Job?

What happens to a 457b after leaving job

Depending on the rules of your plan, it may be possible for you to transfer or roll over funds into another retirement account – though your options will likely be restricted due to tax considerations.

Like other retirement accounts, 457b accounts don’t allow withdrawals before age 59 1/2 without incurring an early withdrawal penalty and income taxes; however there are ways around it.


A 457(b) retirement plan allows workers to make pre-tax contributions and invest them, and is offered by some government and non-government employers for their employees. Withdrawals from government plans tend to be tax-free while non-governmental plans may impose additional taxes or penalties upon withdrawal.

Once a participant retires, they may opt to transfer assets out of their 457(b) plan and into another retirement account or an IRA in order to expand investment options or consolidate multiple accounts. This can be especially useful when looking for more diverse investment choices or consolidating retirement accounts.

Government 457(b)s can be converted to other retirement plans such as an IRA, 403(b), or 401(k). Non-governmental 457(b)s may only be converted to traditional or Roth IRAs – any other account typically incurs mandatory federal income tax withholding; withdrawals before age 59 1/2 will incur an early withdrawal penalty and regular income taxes.


A 457(b) deferred compensation plan allows employees to save and invest funds tax-deferred, meaning no taxes will be withheld until funds are withdrawn, typically during retirement.

457(b) plans offer one key advantage over 403(b)s and 401(k)s: contributions and earnings are not subject to an early withdrawal penalty when leaving your employer prior to age 59 1/2, although you’ll still owe regular income tax on these funds.

Similar to 401(k)s, 457(b)s are owned by your employer rather than you, making them vulnerable to the creditors of the company if it ever goes bankrupt; before investing too heavily into this type of plan. Furthermore, this account might only permit withdrawal with approval of your employer; this can especially be an issue for government workers such as police officers and firefighters.


When participants switch employers, their 457(b) account can often be transferred. Participants can roll it over into nearly any type of retirement account that meets certain criteria outlined by the IRS; funds rolled-over typically do not count toward meeting annual contribution limits for retirement plans.

Participants looking to roll over a 457(b) account should consider its tax implications prior to opening an IRA account; otherwise they will be held liable for taxes on all withdrawal amounts received as per tax code requirements.

A 457(b) plan is a retirement account used by government employers and certain private tax-exempt organizations. Similar to 403(b), but with larger contributions and more flexible withdrawals. You may even convert your 457(b) into an IRA for even greater investment options and flexibility; however, doing so may incur tax consequences for older participants.


Withdrawals from non-governmental 457(b) plans are taxed similarly to any retirement accounts; the only exception being mandatory minimum distributions that must begin taking place beginning at age 72 unless transferred to another employer’s plan or Roth IRA. It’s essential that you understand how taxation impacts the choices available to you when making these choices.

Public 457(b) plans are distinguished from other qualified plans by permitting penalty-free withdrawals after separation or for unforeseeable emergencies, making them stand out. This unique feature sets them apart from 401(k), 403(b), and other qualified plans, making accessing these accounts more challenging while still employed at their sponsoring organization. Tax-exempt organizations often make mistakes managing 457(b) plans due to these differences and must find the balance between tax savings offered by 457(b), limited flexibility, and investment restrictions when managing their plans — see chart for details!

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