457 Plan Distributions

[Guest Frankie]

Is it accurate to state that contributions that originate in a Governmental 457 Plan are never subject to a 10% premature distribution penalty ? I would apprecicate any help here.

[Guest b2kates]

Look at Internal Revenue Code Section 72(t).

I do not believe Section 72(p) extends to early distributions.

(ii) Special rule

The term ''qualified employer plan'' shall include any plan

which was (or was determined to be) a qualified employer plan

or a government plan.

(B) Government plan

The term ''government plan'' means any plan, whether or not qualified, established and maintained for its employees by the United States, by a State or political subdivision thereof, or

by an agency or instrumentality of any of the foregoing.

[Ellie Lowder]

457(B) governmental plans assets are not subject to the 10% premature distribution penalty tax; however, if those assets are rolled over to an IRA, or a qualified or 403(B) plan, then the 10% penalty tax will apply to those amounts after the rollover (unless, of course, the participant is over age 59 1/2 or otherwise qualifies for an exemption to that additional tax).