Author Topic: Leaving state government...a 457 question  (Read 2694 times)

Aki

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Leaving state government...a 457 question
« on: August 30, 2015, 12:26:11 PM »
Hi all.  DH is leaving state government employment soon and will roll over his state 401k to an IRA with Vanguard but is wondering if he can do the same with his 457.  (This he can access when he leaves state gov't at any age without penalties but must pay taxes on money he withdraws.)  I assume he can just set up a 457 acct with Vangaurd?  I'd call Vanguard but they're closed today...   

johnny847

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Re: Leaving state government...a 457 question
« Reply #1 on: August 30, 2015, 12:33:15 PM »
Nobody as an individual can set up a 457 at vanguard. But your DH can either rollover his 457 to an IRA or a 401k at a new job (not sure if he's taking a new job), which I would not recommend because he will lose access to his money, or just keep his money at his current 457, which is what he should do to be able to make penalty free withdrawals whenever he wants.
The one exception is if his new job offers institutional shares of vanguard's funds in the 401k, which are actually cheaper than what you can get as an individual. In that case, rollover the 457 funds

Aki

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Re: Leaving state government...a 457 question
« Reply #2 on: August 30, 2015, 12:46:52 PM »
Thanks johnny847!  Good to know that if he rolls over 457 to IRA he'll no longer have access to that money penalty free.  I think he'll leave it where it's at.

forummm

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Re: Leaving state government...a 457 question
« Reply #3 on: August 30, 2015, 01:57:04 PM »
If he rolled it over he could still access it penalty free via Roth conversions. But it's still a hassle. I would keep it in the 457 if the fees are reasonably low.

http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

johnny847

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Re: Leaving state government...a 457 question
« Reply #4 on: August 30, 2015, 02:12:57 PM »
If he rolled it over he could still access it penalty free via Roth conversions. But it's still a hassle. I would keep it in the 457 if the fees are reasonably low.

http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

Yeah that's true but I was specifically talking about the 457 exception. Which can be used immediately as opposed to waiting five years with the Roth pipeline.

forummm

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Re: Leaving state government...a 457 question
« Reply #5 on: August 30, 2015, 02:14:13 PM »
If he rolled it over he could still access it penalty free via Roth conversions. But it's still a hassle. I would keep it in the 457 if the fees are reasonably low.

http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

Yeah that's true but I was specifically talking about the 457 exception. Which can be used immediately as opposed to waiting five years with the Roth pipeline.

Yeah, it's definitely better to leave it in the 457 unless the fees are too high.

Cassie

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Re: Leaving state government...a 457 question
« Reply #6 on: August 30, 2015, 03:46:48 PM »
We left ours there because fees were low and at age 55 we could withdraw anytime we wanted without penalties.

TomTX

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Re: Leaving state government...a 457 question
« Reply #7 on: August 30, 2015, 08:26:46 PM »
My employer offers both 401k and 457 plans. They are identical investments, costs, etc, but you can only move money between them on one occasion:

When you leave employment.

Your husband may be able to roll the 401k money into the 457. He needs to check the plan documents. If the fess are low and the investment options are good - that's what I would do.

Cassie: You don't have to wait until 55 to withdraw without penalty from a 457. You just have to leave that employer. No age limit.

Aki

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Re: Leaving state government...a 457 question
« Reply #8 on: August 31, 2015, 06:42:34 PM »
TomTX: DH currently has both 401k& 457 through his now-former state gov't employer (he started new job today), with same investments and costs, like yours.  That's definitely worth looking into.  Thanks!

TomTX

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Re: Leaving state government...a 457 question
« Reply #9 on: September 05, 2015, 03:11:15 PM »
TomTX: DH currently has both 401k& 457 through his now-former state gov't employer (he started new job today), with same investments and costs, like yours.  That's definitely worth looking into.  Thanks!

Is the employer Texas? Leaving at the end of the FY (August 31) is very popular.