At age 70˝ you can withdraw your money from a 457 plan.
However, any distribution would still be subject to applicable federal, state,
and local income taxes.
Distributions may be made prior to age 70˝ only under the following circumstances:
- Separation from Service with the Sponsoring Employer
- Voluntary resignation
- Termination
- Permanent layoff or retirement
- Termination of the Plan
- Death
- De Minimus Amount
Depending on your plan document, distributions of up to
$5,000 may be taken provided: (i) an account does not exceed $5,000, (ii) no
salary reduction contributions or employer contributions have been made to an account
during the prior two years ending on the date the de minimus distribution is
taken, and (iii) no previous de minimus distribution has been taken from the plan.
- Unforeseeable Emergency
Depending on your plan document, you may qualify for a financial hardship
withdrawal if you have an immediate and heavy financial need due to:
- Illness or accident of participant, beneficiary, spouse, or dependents.
- Loss of property due to casualty.
- Other extraordinary and unforeseeable circumstances beyond your control such as the following:
- Imminent foreclosure or eviction from primary residence
- Uninsured medical expenses
- Funeral expenses
- QDRO
A Qualified Domestic Relations Order is a court order that outlines the
requirements for splitting 457 funds in the case of a divorce. A QDRO should be specific and
detailed, including: either a percentage or dollar amount to be distributed to the ex-spouse
or other designated alternate payee; the date of the account valuation; how the money should
be distributed; and, if taxes are applicable, who has the responsibility to pay the taxes.
It is always best to seek the assistance of an attorney who is knowledgeable in drafting QDROs.
Consulting an attorney may save you time and additional expense in making sure the QDRO is acceptable upon first
submission.
This Web site is not intended or written to be used as
legal or tax advice. As a taxpayer, you cannot use it
for the purpose of avoiding penalties that may be imposed
under the tax laws. You should seek advice on legal or tax
questions based on your particular circumstances from an
independent attorney or tax advisor.
*Statistics compiled from the 2004 Retirement
Confidence Survey, Employee Benefit Research
Institute; and
"Coming Up Short: The Challenge of 401(k) Plans," Alicia Munnell
and Annika Sunden
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