457 rules

[rocks911]

I currently have money in a 457. I am wondering when I retire with the city I work for can I move money out of the company my employer has chosen for me and still maintain a 457 status?

In other words, I have money in a 457 because I work for a municipality, that money is with ICMARC. When I retire can a move that money to another company, say Vanguard and have it still be a 457? Or am I stuck with ICMARC, cause their funds suck pretty badly and I would like to transfer my money to a better company with more investing choices but dont want to lost my 457 status.

Any thoughts would be appreciated

 

[H2ODude]

Don't know about another 457 but you certainly can move it into an IRA, which I did upon leaving both the municipalities I had worked for. Roll it over and not withholding as long as move it directly to the IRA.

 

[euro]

I don't know what the "457 status" entails, but I'm assuming it is a similar situation to rolling over a 401k to an IRA. No problem doing that, but they are now IRAs and no longer retain any "perks" from the previous setup.

 

[hnzw_rui]

Nope. You can rollover the funds to Vanguard but it will be a rollover IRA so you would be subject to pre-59.5 early withdrawal penalty.

Does your plan allow doing a partial rollover? Keep funds you need from when you retire to 59.5 in your current 457 and then move the rest to Vanguard?

 

[euro]

should have added: see recent discussion on rolling over 401k vs leaving it with the company
http://www.early-retirement.org/forums/f28/leaving-401k-with-company-post-retirement-80503-3.html#post1687873

 

[timo2]

My DW has one of those, also with ICMARC. I only know what I researched and what DW's retirement agent told her. You can move the money, but the funds then take on the distribution limitations of the receiving plan. So the 457 is non-qualified, and if you move it to a qualified plan, the money loses the non-qualified status. This may make a difference for you if you are under 59 1/2. Here is a document I've been reading http://www.aon.com/attachments/human-capital-consulting/Article_Retirement_JPPC_Fall13_Schwallie.pdf

 

[rocks911]

Nope. You can rollover the funds to Vanguard but it will be a rollover IRA so you would be subject to pre-59.5 early withdrawal penalty.

Does your plan allow doing a partial rollover? Keep funds you need from when you retire to 59.5 in your current 457 and then move the rest to Vanguard?

Yea, thats what I thought. I guess one of the major designs of the 457 plan was to keep one forever tied to funds that run the gamut from extremely mediocre to incredibly crappy.

 

[timo2]

Yea, thats what I thought. I guess one of the major designs of the 457 plan was to keep one forever tied to funds that run the gamut from extremely mediocre to incredibly crappy.

Yes, DW's selection of funds in ICMARC are really poor. Here employer is moving their 457 plans over to empower (great west) this month, so that should be better.

 

[dvalley]

I have one too and I elected to take a lump-sum distribution at the time of separation of service. I wonder if that means they will liquidate and give me cash? That wouldn't be good if the market's down at that time (whenever that time is).

 

[hnzw_rui]

Yea, thats what I thought. I guess one of the major designs of the 457 plan was to keep one forever tied to funds that run the gamut from extremely mediocre to incredibly crappy.

I'm actually okay with our govt 457b plan (TPA: Empower/Great West).

We have "core" plan options (best choice there is the Large-Cap fund which is basically Vanguard S&P 500 Index Institutional Plus @ 0.02% ER) but there's also an option for self-directed brokerage (with Schwab) which lets me invest in thousands of stocks, ETFs, mutual funds, etc.

Of course, being the lazy person that I am, I just have everything in Vanguard Target 2040 VFORX. Plan on doing an in-kind transfer/rollover to Vanguard once I turn 60.

 

[nun]

If you roll 457 money into an IRA you then have to follow IRA rules....so you lose the ability to do penalty free withdrawals before age 59.5.
I'm leaving my 457 money where it is as the funds are good with low fees and the penalty free access prior to 59.5 is useful.

 

[rocks911]

I'm actually okay with our govt 457b plan (TPA: Empower/Great West).

We have "core" plan options (best choice there is the Large-Cap fund which is basically Vanguard S&P 500 Index Institutional Plus @ 0.02% ER) but there's also an option for self-directed brokerage (with Schwab) which lets me invest in thousands of stocks, ETFs, mutual funds, etc.

Im pretty sure the administrators at the city I worked for got a sweet deal of their own to sell us unwashed masses the bag of dog poop that is ICMARC.