Okay, I am confused. First I read that the 457 will be treated like a 401k or 403b, meaning that any withdrawals before age 59.5 will be subjected to a 10% penalty in addition to taxes. Now I'm seeing that the 457 may be done away with altogether after 2017. Which is it?
I have a small (<$10k) 457(b) from my previous employer. Should I cash it out before the end of the year, just in case?
My understanding:
House bill - eliminates non-governmental (i.e. those held by non-profits for highly compensated employees) 457(b)s, but no changes to governmental 457bs
Senate bill - basically as you state, treated like a 403b/401k and if you have access to both, you can contribute 18,500 total combined (rather than current law, allowing 18,500 to each account type)
Final bill - ???? No one knows
If you cash out the 457b, you'll need to pay taxes. If you planned on using that money for something other than retirement, you could cash it out (if one of these bills passes). But I would just leave it there for retirement and treat it as a 401k. You can get the money out through Roth conversions / SEPP.