Posted: 2/25/2010 6:57:10 PM EDT
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I worked for a couple years at a city with a 457 Deferred Compensation plan... Basically, we had an amount to spend on health insurance, and anything we didn't use went into this plan. I only have around $4k in there since I didn't work at the city for a long time. So the company the 457 is with sent me a letter talking about how if I start contributing more I will get more in the end, blah, blah, blah –– got that, everyone understands that (or should!)... but their site won't let ME contribute funds since 457's are normally EMPLOYER contributions. There is an option to roll it over to an Roth IRA... which I would like to start up, but not with this company (haven't called them yet to discuss options). BUT, it would also be nice to take this $4k that is sitting there and use it to pay a good portion of my car off and reduce my debt (the car is my only debt)... but I am not sure if you can take your money out of a Deferred Comp plan without penalty... Has anyone on here dealt with a 457 plan before? Or should I just break down and call the company? Last time I called them I was on hold for 30 minutes... after a multi-level phone tree... so I really am not looking forward to calling them again. Thanks! |
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You'll pay income taxes on it plus 10% early withdrawal penalty.
Should I use my 457 to pay down debt? |
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Is this a 457b deferred comp plan we are talking about? If so, there is no penalty for withdrawal if you meet certain criteria. Separation from employment is one of those. You should be able to close the account since you no longer work for the employer, and then you will only pay income tax on the distribution.
457b is not treated as 401k or IRA |