Understanding 457(b) Withdrawals
A 457(b) plan is a tax-advantaged retirement savings plan available to state and local government employees, as well as employees of certain non-profit organizations. One of the key advantages of a 457(b) is that there's no 10% early withdrawal penalty if you separate from service, regardless of your age.
Key Features
- No early withdrawal penalty when separated from service (governmental plans)
- Withdrawals from traditional 457(b) are taxed as ordinary income
- Roth 457(b) withdrawals are tax-free if qualified
- Can roll over to IRA or other qualified plans
- Required minimum distributions begin at age 73
- Special catch-up provisions available in final 3 years before retirement
457(b) vs Other Retirement Plans
| Feature | 457(b) | 401(k) | IRA |
|---|---|---|---|
| Early Withdrawal Penalty | None after separation | 10% before 59.5 | 10% before 59.5 |
| Rule of 55 | Not needed | Applies | Not applicable |
| Loans Available | Sometimes | Usually | No |
| RMD Age | 73 | 73 | 73 |