How to Fund an IRA using a 457 Plan?

As part of retirement planning, it's essential that funds are placed where they will best benefit your long-term interests. One such issue that often arises in terms of retirement savings involves whether it is possible to transfer funds from 457 plans into Individual Retirement Accounts (IRA). We will examine some aspects of 457 plans as well as which IRA types could accommodate such transfers successfully and how best to do it all in this article.

Rollover to an IRA

Funds in your 457(b) government plan can be converted to an Individual Retirement Account (IRA). Depending on your preferences and eligibility, traditional or Roth IRAs are both options; rolling them over may offer greater investment options compared to what was offered through your 457 plans; they also often permit more freedom regarding distributions and beneficiary designations.

Note, though, that rolling your 457(b) funds over to a Roth IRA funded with post-tax dollars requires payment of taxes immediately upon rollover; conversely transferring them over into a traditional IRA funded with pre-tax money won't result in immediate tax liabilities at time of transfer.

As with the non-governmental 457(f) plans, rollover options for non-government 457(f) plans can be limited; generally, they cannot be transferred directly into an IRA account.

Steps for a Successful Rollover

  • Identify Your Eligibility: To check eligibility for a rollover, review plan documents or consult your plan administrator as necessary.

  • Establish an IRA: If you do not already possess an IRA, opening one should be your next step. Understand all available options (traditional and Roth IRAs) along with potential financial institutions where to open one.

  • Starting a Rollover: For initiating the rollover, reach out to the administrator of your 457 plan. It may be possible to complete it online, while in other instances paperwork might need to be filled out and submitted.

  • Opt for Direct Rollover: For maximum tax efficiency and penalties-free transfers from a 457 plan directly into an IRA without withholding taxes or taking possession, direct rollover may be best. In this scenario, funds go from 457 to IRA without your taking control over them first.

  • Select Investments: Once funds have been placed in your IRA, it's up to you to select how they'll be invested - this could involve mutual funds, stocks and bonds or any number of vehicles for investment.

  • Monitor and Alter: It is wise to conduct regular reviews of your investments and adjust as necessary based on your retirement goals and risk tolerance.

Considerations and Risks

It is crucial that prior to undertaking a rollover, one carefully considers both the costs and benefits of doing so. Beware of potential fees as well as investment choices available within each type of account. Also speak with an adviser in order to fully comprehend these implications as well as ensure this option best serves their individual financial situation.

Another thing to keep in mind when withdrawing funds without penalties is when and at what age can withdraw them without being subject to early withdrawal penalties. Withdrawals made prior to age 59 1/2 from 457(b) plans typically do not incur early withdrawal penalties of 10% early withdrawal penalty (with certain exceptions), while traditional IRA withdrawals prior to that age may incur early withdrawal penalties (some exceptions apply).


Rolling over from a 457 plan into an IRA can be an advantageous financial move, providing access to wider investment choices with potentially lower fees. While governmental 457(b) funds might qualify, non-government 457(f) plans typically do not. When considering such moves, it's essential that one carefully consider the tax implications, penalties, costs associated with rollover as well as potential penalties; seeking advice from financial advisors for assistance would also provide peace of mind when planning for financial security in retirement accounts and formulating customized strategies tailored specifically tailored just for yourself is always wises when planning secure financial future!