457 Retirement Plan
Your employer's 457 plan may have restrictions for withdrawing assets from the 457 plan. If you meet the requirements for withdrawing from your employer's plan, there are several guidelines to consider before making a final decision.
Since 457 plans were created to help you save for retirement, there may be stiff penalities for withdrawing money early. If you do, you'll owe:
- Income taxes on the total withdrawal
- 20% federal income tax withholding unless the entire amount is rolled over to another qualified retirement plan
Q: When will my contributions be available for withdrawal?
A: Withdrawals are available if you meet one of the following conditions and are subject to employer plan rules:
- You reach age 70 1/2
- Your death or toal disability
- Separation from service
- Severe financial hardship (limited to contributions only)
- Qualified Reservist Distribution1
- Qualified Domestic Relations Order (QDRO)2
- No contributions have been made for at least 2 years and account balance is under $5,000
Q: What qualifies as a unforeseen emergency?
A: Harship distributions are an immediate and heavy financial burden caused by one of the following events:
- Payment of rent or mortgage to avoid evictions or foreclosure
- Funeral expenses for an immediate family member of employee
- Uninsured and unpaid family medical expenses
Note: Unforseen emergency withdrawals are not allowed for credit debt or student loans
1To qualify for the exception, the reservist must be called to activate duty for more than 179 days and the withdrawal must occur while the reservist is serving on active duty. These early withdrawals may still be subject to state and federal taxes.