How Can I Take Distributions from a 457 Plan?
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How Can I Take Distributions from a 457 Plan?
Unlike 401(k)s, 403(b)s, and IRAs, which allow unrestricted distributions beginning at age 59½, withdrawals from a 457(b) plan are more complex. You can make withdrawals upon your retirement even if you haven’t attained age 59½. Of course, you must pay any income taxes due because they will be taxed as ordinary income, but there will not be the 10% penalty that characterizes other plans.
Things To Know
- You won’t be penalized if you take distributions before age 59½ in certain situations.
If you are still employed, however, you generally may not make withdrawals until age 73. But withdrawals prior to that can be made in certain exceptions:
- Unforeseeable emergency, as defined by regulations (e.g., an accident or illness). The 457 financial hardship rules are more strict than the 401(k) financial hardship rules.
- Plan termination
- Distribution of small amounts
When you must take distributions
As with many other retirement plans, you are required to begin taking distributions from your 457 at age 73 or the year you retire, whichever comes later. Roth 457s are exempt from this requirement starting in 2024.
Your organization’s plan may have additional rules and restrictions beyond those imposed by federal regulations. Also, there are additional rules on distributions beyond those mentioned above. Be sure to study your plan carefully and ask questions.