§457(b)/Roth §457(b)
Governmental Plan Distributions
In order to receive benefits as a
§457 plan participant, you must either:
- separate from service
- attain age 70½
- incur an unforeseeable emergency
Upon separation from service, §457 account assets can be withdrawn without penalty at any age, providing a flexible income solution for early retirees.
Distributions must begin by age 70½ or retirement, whichever occurs later. The first minimum distribution must be taken by April 1st of the year following the year containing this triggering event.
The rules for §457 plan in-service distributions due to unfore-
seeable emergencies are much stricter than those for other plans.
Unforeseeable emergencies may include:
- imminent foreclosure of, or eviction from, a primary residence
- medical expenses
- funeral expenses for a family member
- financial hardship
However, a distribution may not be made if relief is available through insurance, reasonable liquidation of other assets or cessation of deferrals to the plan. Talk to your Legend Advisor for details.
Ordinary income taxes will apply to all traditional §457 account distributions. Qualified Roth §457 distributions are tax-free.
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1In order for the Roth §457(b) account to be distributed tax-free, it must be funded for a minimum of five years and the account holder must have attained age 59½. In the event of the account holder’s death, beneficiaries would receive tax-free distributions if the account was held for at least five years. Otherwise, the distribution would be treated as part return of principal and part taxable earnings. A 10% premature withdrawal penalty never will apply to the earnings.
Legend Equities Corporation and its affiliates do not provide tax or legal information or advice.