457 plan questions

[Guest cesmythe101]

I have a deferred compensation plan(457) sponsored by my municipal employer located in New Jersey. I was told by the plan's local representative that the only way to take money out was at retirement or if I quit. I called "Metlife" directly and was told by their corporate representative, that I could take money out for hardship, which included for example, my desire to obtain funds for a downpayment as a "first time homebuyer". My employer sided with the local plan representative who is of the opinion that "first time homebuyer" doesn't qualify as a hardship and that the IRS expressly forbids it! WHO IS RIGHT?

Second, I have lost faith in the trustworthiness of my deferred compensation plan's representative and their guardianship over my funds. Can I rollover the accumulated value of my plan into a retirement plan sponsored by another investment company or bank. My township employer, together with Metlife's local plan representative maintain that this is only possible upon my retirement (in 2015) or permanent seperation. Can you point me in the right direction to secure competent answers to the above questions?

[PensionPro]

Distributions from a 457(b) plan are not permitted on account of the purchase of a new home. You were misled by the Metlife rep you talked to on the phone. If a 457(b) plan provides for hardship distributions, it must contain specific language defining what constitutes a distribution on account of an "unforeseeable emergency." (Reg. § 1.457-6©(2)). Purchase of a new home is not an unforeseeable emergency under the regs. Generally you must wait till severance from employment or attainment of age 70 1/2. See the IRS article here ...

http://www.irs.gov/retirement/article/0,,id=232436,00.html

[QDROphile]

One thing you have to keep in mind is that the plan does not have to offer everything that the law allows. Discussions of what is allowable must defer to the the plan, the offical interpretation of the plan, and applicable plan policies. You might start with reading the plan. You could look at section 457(b) of the Internal Revenue Code and related regulations. I think that you will find that a home purchase is not an appropriate event for access to funds while you remain employed. That is not the rule for 401(k) plans, so do not be confused by what you may learn about 401(k) plans.