Can my Section 457 plan account balance be rolled over into an IRA?
Section 457 plans are nonqualified,as a result, funds cannot be rolled over into an Individual Retirement Account (IRA). Proceeds from a Section 457 may only be transferred to another such plan. If you have a Section 457 plan and are leaving your government job to work in private industry, you have two choices. First, you can take the plan s balance in a lump sum and pay ordinary income taxes on the distribution. Or, you can leave the balance with your previous employer until a predetermined date. If you choose to leave the Section 457 plan where it is, you avoid current income taxes and the balance will continue to grow tax-deferred. You can continue to manage the investments just as if you were still employed, but you cannot make any additional contributions. Beginning in 2002, participants may roll their 457 plan distributions to any other tax favored plan including IRAs and if the plan documents allow it, qualified plans, other 457 plans or TSAs.
