10% penlaty waiver on 457 plan distribution
is there a 10% penlaty waiver on the 457 plans that is exeptional to 457 plans. is there anything new regarding this. I thought unless you are 591/2 and qualify for certain exeptions that one must pay the penalty if request a distribution. any thought?
Permalink Submitted by Alan Spross on Thu, 2009-02-05 22:33
The penalty only applies to qualified retirement plans, which includes IRA accounts for these purposes. But a 457 is a non qualified plan, so is not subject to the penalty.
Permalink Submitted by Edward Czapor on Fri, 2009-02-06 17:12
Alan,
Is this also true for a 457(b) plan or only a 457(f) plan ?
Ed C.
Permalink Submitted by Alan Spross on Fri, 2009-02-06 22:25
Both. Both are non qualified.
One difference between a govt 457b and the other 457 types is that only the govt 457 can be rolled over to an IRA.
Permalink Submitted by BruceM on Mon, 2009-02-09 16:26
[quote=”[email protected]“]Alan,
Is this also true for a 457(b) plan or only a 457(f) plan ?
Ed C.[/quote]
A 457(b) offered by a non-profit organization is generally not transferrable, is paid out per the plan document and is not subject to the 10% early withdrawal penalty
A 457(f), whether offered by a Government (for example a state college football coach) or offered by a non-profit organization (such as the CEO of Goodwill Industries) is true deferred comp as covered by sect. 409(A). There are no dollar limits on contributions, it is fully discriminatory, it is non-transferrable and there is no 10% early withdrawal penalty.
BruceM
Permalink Submitted by Martin Helmer on Mon, 2009-02-09 22:25
A 457(b) plan will not generally be transferred in the sense of a trustee to trustee transfer.
But note that a 457(b) plan is subject to rules similar to those for a qualified plan as far as being required to offer the participant a direct rollover.
Permalink Submitted by Al Fry on Tue, 2009-02-10 14:24
457(b) Governmental, that is.