How do I Transfer 457 Funds to an IRA?

By: D. Laverne O'Neal

You can move your governmental 457 money to a traditional or Roth IRA.

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A 457 plan is a retirement plan for government and nonprofit employees that is much like a 401(k). Until 2001, the Internal Revenue Service did not allow you to transfer assets from your governmental 457 plan to anything other than another governmental 457. The Economic Growth & Tax Relief Reconciliation Act of 2001 provided greater freedom relative to transferring one type of retirement account to another, including to an individual retirement arrangement. You cannot, however, transfer a nongovernmental 457 to any other type of retirement plan.

Step 1

Contact your 457 plan administrator. To effect the transfer, the administrator may ask you to fill out a form. You must let him know how much you want to transfer and which IRA you want to move the funds to.

Step 2

Contact your IRA trustee. Some trustees have their own paperwork to complete before receiving the transfer. You need to let the institution know how much you are transferring and from which institution and account.

Step 3

Ask the 457 plan administrator to make a direct, or trustee-to-trustee, transfer of the specified funds to your Roth IRA or traditional IRA. A direct transfer ensures you sidestep any potential tax liability.

Step 4

Check in with both the plan administrator and the IRA trustee to be sure the transaction has been completed. If after 10 business days it has not been done, contact both parties for an explanation.


  • If you convert 457 funds to a Roth IRA, you have to include the transfer amount as income when you file your tax return. The transaction may propel you into a higher tax bracket. If you are not familiar with the tax issues that can arise from retirement plan transfers, consulting a tax or financial professional is a good idea.


  • You can have your 457 plan administrator cut you a check in the transfer amount and convey it to the IRA yourself. If you do, the administrator must withhold 20 percent of the amount for federal taxes. To deliver the full transfer amount to the IRA, you'll have to make up the 20 percent with money from some source other than your 457. You'll also have just 60 days to complete the transfer. If you miss the deadline, the IRS will see the transaction as a withdrawal, and you'll be responsible for any tax liability that applies to 457 distributions. If you are under age 59 1/2, you'll pay a 10 percent early withdrawal penalty in addition to ordinary income tax.


About the Author

D. Laverne O'Neal, an Ivy League graduate, published her first article in 1997. A former theater, dance and music critic for such publications as the "Oakland Tribune" and Gannett Newspapers, she started her Web-writing career during the dot-com heyday. O'Neal also translates and edits French and Spanish. Her strongest interests are the performing arts, design, food, health, personal finance and personal growth.

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