Teacherinneed Posted October 17, 2016 Share Posted October 17, 2016 Is it even possible that I terminate my 457b plan while still working (I am only 52 yrs old and want to keep working at my current job) and collect the money that i have already contributed to my account and just pay the normal 10% penalty (plus taxes) that I would incur as if i was to terminate a regular 401 type of plan and put my money somewhere else? Not really pleased with having my money in the 457b. Thanks! Link to comment Share on other sites More sharing options...
Belgarath Posted October 17, 2016 Share Posted October 17, 2016 Only an employer can terminate an employer-sponsored plan. An employee cannot terminate the plan. Is it in fact a 457 plan, or is it a 403(b)? Regardless, I assume you mean you want to receive a current distribution while still employed, and your question should first be directed to your plan administrator/benefits office to see if certain in-service/hardship/loan provisions apply. As a general rule, you can't just withdraw your funds at age 52 while still employed. Link to comment Share on other sites More sharing options...
Carol V. Calhoun Posted October 17, 2016 Share Posted October 17, 2016 As Belgarath says, an employee cannot terminate a plan; only the employer can. And in the absence of a plan termination, you cannot receive a distribution earlier than the earliest of: the calendar year in which you turn 70-1/2; when you have a severance from employment; when you have an unforeseeable emergency. Code section 457(d)(1)(A). There is a limited exception to this for governmental plans which allows for a distribution if your total account balance (not including rollovers) is less than $5,000, you haven't made contributions for 2 years, and you haven't received a prior distribution. See Code section 457(e)(9)(A) for details. Employee benefits legal resource site The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances. Link to comment Share on other sites More sharing options...
John Feldt ERPA CPC QPA Posted October 17, 2016 Share Posted October 17, 2016 Also, there is no 10% penalty tax for payment before 59.5 under a 457(b) plan. So if you do terminate employment and withdraw the funds taxable before age 59.5 (or 55), you won't be hit with a 10% penalty tax. Link to comment Share on other sites More sharing options...
Carol V. Calhoun Posted October 18, 2016 Share Posted October 18, 2016 John Feldt is right, except to the extent that the amounts in the 457(b) plan consist of rollovers from another type of plan or IRA. Employee benefits legal resource site The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances. Link to comment Share on other sites More sharing options...
John Feldt ERPA CPC QPA Posted October 18, 2016 Share Posted October 18, 2016 Thanks Carol. Yes, if your governmental employer 457(b) plan allows rollovers, those rollover accounts are still subject to the same 10% early penalty tax rules if they are later withdrawn as taxable. If you work for a non-profit corporation, the 457(b) plan can't have rollovers anyway, the accounts are paid as W-2 wages, and still not subject to the 10% early withdrawal penalty tax. Link to comment Share on other sites More sharing options...
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