Yes, you can roll a 457 plan into an IRA, but the rules depend on which type of 457 plan you have

A 457(b) plan — the most common type — can be rolled into a traditional IRA or Roth IRA, but only after you leave your job or reach age 59½. A 457(f) plan (much rarer, offered by some nonprofits and educational institutions) has stricter rules and generally cannot be rolled over. The key difference is timing: with a 457(b), you control when the rollover happens once you're may be able to access. With a 457(f), the money is usually locked until a specific event occurs, and rollovers aren't an option.

The reason this matters is that rolling over gives you more investment choices and lower fees than most employer plans offer. It also consolidates your retirement savings in one place, making it easier to track and manage as you get closer to retirement.

Key Takeaways

  • You can roll a 457(b) plan into a traditional or Roth IRA after you leave your job or turn 59½, but a 457(f) plan has different rules and usually cannot be rolled over.
  • A direct rollover — where your plan administrator sends the money straight to your IRA — avoids taxes and penalties that can happen with indirect rollovers.
  • Rolling into a traditional IRA preserves the tax-deferred status of your money, while rolling into a Roth IRA means paying taxes now but having tax-free withdrawals later.
  • You must complete the rollover within 60 days if you take the money yourself, though a direct rollover has no time limit.

The difference between a direct rollover and taking the money yourself

A direct rollover is the safest route. You contact your 457(b) plan administrator and ask them to send your balance directly to the IRA you've opened at a bank, brokerage, or credit union. The money never touches your hands. No taxes are withheld, and you avoid the 60-day clock entirely.

An indirect rollover means the plan sends you a check. You then deposit it into your IRA yourself. This sounds simpler, but it carries real risk. Your plan administrator will withhold 20% for federal income taxes. You have 60 days to deposit the full amount — including that 20% — into the IRA, or the amount not deposited counts as taxable income and may be subject to a 10% early withdrawal penalty if you're under 59½. Many people miss this important date by accident or can't come up with the withheld amount, which turns a routine rollover into a taxable event.

For this reason, a direct rollover is almost always the better choice. Call your plan administrator and ask for the direct rollover form. They will handle the rest.

Rolling into a traditional IRA versus a Roth IRA

When you roll a 457(b) into a traditional IRA, the money stays tax-deferred. You don't pay taxes on it now, and you don't pay taxes when it grows. You pay taxes only when you withdraw it in retirement. This is the most common choice because it mirrors what your 457(b) already does.

Rolling into a Roth IRA is different. You must pay income taxes on the full amount you roll over in the year you do it. After that, the money grows tax-free, and you can withdraw it tax-free in retirement. This makes sense if you expect to be in a higher tax bracket later, or if you want to leave tax-information programs to your heirs. But it requires you to have cash on hand to pay the tax bill — you can't use the 457(b) money itself to cover it.

There's no rule against doing both: you can roll part of your 457(b) into a traditional IRA and part into a Roth IRA in the same year. Some people do this to spread out the tax hit of a Roth conversion.

What happens to your money after the rollover

Once your 457(b) balance lands in your IRA, it becomes subject to IRA rules, not 457(b) rules. The most important difference is the withdrawal age. With a 457(b), you can withdraw money penalty-free once you leave your job, regardless of age. With an IRA, you generally can't withdraw without a 10% penalty until age 59½ (with some exceptions, like disability or medical expenses).

Your IRA also has required minimum distributions (RMDs) starting at age 73. Your 457(b) had RMDs too, but the age and calculation method may differ slightly. Once the money is in an IRA, the IRA RMD rules explore.

On the positive side, an IRA usually offers far more investment choices than an employer plan. You can invest in individual stocks, bonds, mutual funds, and exchange-traded funds. Many 457(b) plans limit you to a handful of mutual funds. Lower fees are also common in IRAs, especially if you open one at a low-cost brokerage.

When you cannot roll over a 457 plan

If you have a 457(f) plan, rollover options are limited or nonexistent. These plans are offered by some nonprofits, educational institutions, and state agencies. The money in a 457(f) is usually locked until you leave your job or reach a specific age set by your employer. Some 457(f) plans allow a rollover to an IRA after you separate from service, but others do not. Check your plan documents or call your plan administrator to find out.

You also cannot roll over a 457(b) while you're still working for the employer that sponsors it — with one exception. If your plan allows "in-service distributions," you may be able to roll over a portion while still employed. This is rare, so ask your plan administrator whether your plan offers it.

The tax forms you'll need

For a direct rollover, your plan administrator handles most of the paperwork. They will send Form 1099-R to you and the IRS, showing the rollover. You report this on your tax return, usually on Form 1040. The IRA custodian (the bank or brokerage holding your IRA) will also send you a Form 5498 showing the contribution.

For an indirect rollover, you receive the check and deposit it yourself. Your plan administrator still sends Form 1099-R, but now it shows a distribution to you, not a direct rollover. You must report the rollover on your tax return to show the IRS that the money went into an IRA and wasn't taxable income. If you miss this step, the IRS may treat the distribution as taxable, even if you did deposit it into an IRA on time.

Keep records of the rollover for at least three years: the check stub, the deposit receipt, and any correspondence with your plan administrator or IRA custodian. These documents protect you if the IRS questions the transaction later.

Frequently Asked Questions

Can I roll over a 457 plan if I'm still working?

Not usually. You must leave your job or reach age 59½ to roll over a 457(b) plan. A few plans allow in-service distributions, which means you can roll over part of your balance while still employed, but this is uncommon. Contact your plan administrator to ask whether your plan offers this option.

What if I have both a 457 plan and a 401(k)?

You can roll both into IRAs, and they can go into the same IRA or separate ones. Keeping them separate can make it easier to track which money came from which plan, especially if you need to take penalty-free withdrawals under the "substantially equal periodic payment" rule, which treats each IRA separately.

Do I have to roll over my entire 457 balance?

No. You can roll over part of your balance and leave the rest in the 457(b) plan if your plan allows it. Some people do this to keep a portion in the 457(b) for its more lenient withdrawal rules. Ask your plan administrator what partial rollover options are available.

What if I miss the 60-day important date for an indirect rollover?

The money you didn't deposit into an IRA within 60 days becomes taxable income for that year. If you're under 59½, it's also subject to a 10% early withdrawal penalty. You may be able to ask the IRS for a waiver if you had a good reason for the delay, but this requires filing Form 8329 and is not may provide. A direct rollover avoids this risk entirely.

Can I roll a 457 plan into a SEP IRA or Solo 401(k)?

A SEP IRA and Solo 401(k) are both IRAs, so yes, you can roll a 457(b) into either one. However, if you're self-employed and open a Solo 401(k) specifically to receive the rollover, make sure the plan document allows rollovers before you set it up. Not all Solo 401(k) plans do.