Can I Roll a 401(k) Into a 457(b)? Rollovers, Taxes, and RMDs

You can roll a 401(k) into a 457(b), but only if the 457(b) is a governmental plan — one sponsored by a state, county, city, or other public employer — and only if that plan has chosen to accept incoming rollovers. Non-governmental 457(b) plans, the “top-hat” plans offered by hospitals, charities, and other tax-exempt employers, cannot legally take rollover money from a 401(k) at all.¹

Is Your 457(b) Governmental?

Federal tax law defines the accounts that can receive a 401(k) rollover, and the only kind of 457(b) that makes the list is one maintained by a state or local government employer.² The IRS rollover chart confirms the same: pre-tax money in a 401(k) can move into a governmental 457(b).³

If you work for a city, county, state agency, public school district, or similar public employer, your 457(b) is almost certainly governmental. If you work for a nonprofit hospital, a university, or a charity, it probably isn’t. The surest confirmation is in writing: check your plan’s summary plan description or ask the plan administrator directly.

One more check matters even when the plan qualifies. Governmental 457(b) plans are allowed to accept rollovers but are not required to. Before you fill out any paperwork, call the 457(b) administrator and ask two questions: does the plan accept rollovers from a 401(k), and does it accept both pre-tax and Roth money or only one?

When Your 401(k) Will Release the Money

A 401(k) will not hand over funds just because you want to move them. The plan has to be allowed to distribute, and that usually means a qualifying event has occurred:

You separated from the employer sponsoring the 401(k) through resignation, layoff, or retirement.
You reached age 59½ and the plan permits in-service distributions.
You became totally and permanently disabled.
The employer terminated the 401(k) plan.

Without one of these, the 401(k) provider cannot legally release the funds for rollover.⁴ If you are still working for the 401(k) sponsor and under 59½, the rollover generally has to wait.

Direct Rollover vs. Indirect Rollover

Two methods exist for moving the money. One is almost always better.

Direct Rollover

In a direct rollover, the 401(k) sends the money straight to the 457(b). You never touch it. Nothing is withheld, no penalty applies, and the full balance arrives in the new account.⁵ The 401(k) provider will usually either wire the funds or cut a check made payable to the new plan’s trustee “for the benefit of” (FBO) you.

Indirect Rollover

In an indirect rollover, the 401(k) pays you. Federal rules force the plan to withhold 20% of the taxable amount for income taxes.⁶ You then have 60 days to deposit the full original distribution — including the withheld 20% that you did not actually receive — into the 457(b).⁷ To make the rollover whole, you have to replace that 20% from your own pocket and wait to recover it as a tax credit when you file. Anything short of the full amount within 60 days becomes taxable, and may trigger a 10% early withdrawal penalty if you are under 59½. Use the direct method unless there is a specific reason not to.

Where Pre-Tax and Roth Dollars Land

The tax character of your 401(k) money dictates where it can go inside the 457(b).

Pre-tax 401(k) contributions and their earnings roll into the traditional pre-tax side of a governmental 457(b). Virtually every governmental plan accepts this.

Roth 401(k) money is different. It can only go into a designated Roth account inside the 457(b), or into a Roth IRA.² Federal law lets governmental 457(b) plans offer a Roth bucket, but not all of them do.⁸ If your 457(b) has no Roth option, your Roth 401(k) balance either stays put or goes to a Roth IRA. When you complete the rollover request, break out the pre-tax and Roth amounts separately so each is routed correctly.

The 10% Penalty Follows the Money

This is the single most overlooked consequence of rolling a 401(k) into a 457(b). Governmental 457(b) plans have an unusual perk: distributions after you separate from service are not subject to the 10% early withdrawal penalty, no matter your age. Rolled-in 401(k) money does not get that treatment.

Federal law says any distribution from a governmental 457(b) that is traceable to a rollover from a qualified plan like a 401(k) is treated, for penalty purposes, as if it had come from the original plan.⁹ Pull the rolled-over portion out before age 59½ and you owe the 10% penalty on it, even though a withdrawal of your own 457(b) deferrals would be penalty-free.

To make this work, the 457(b) has to track the rollover money in a separate account.¹⁰ One upside of that separate accounting: the plan may let you take distributions from the rollover bucket at any time (with the penalty if applicable), where your regular 457(b) contributions typically stay locked until you leave the job.

Outstanding 401(k) Loans at Separation

If you leave your job with an unpaid 401(k) loan, the balance is usually treated as a distribution. This is called a plan loan offset, and how you handle it decides whether you owe tax on it.

If the loan was in good standing and the offset happened because you separated or because the plan terminated, it is a qualified plan loan offset. You have until your tax return due date for that year, including extensions, to roll the offset amount into your 457(b) or another eligible plan.¹¹ Separate in 2026 and file an extension, and you would generally have until October 15, 2027.

If the offset happened for another reason, such as missed payments while you were still employed, the window shrinks to 60 days. A loan that defaulted and was treated as a deemed distribution without an offset cannot be rolled over at all.⁷ Because the offset is a paper distribution rather than cash in hand, you need to come up with the money from elsewhere to actually deposit into the 457(b).

How to Execute the Rollover

Once both plans are cleared and you have decided on a direct rollover, the process runs between the two providers.

Call the 457(b) administrator first. Get the rollover acceptance procedures, the required forms, the trustee’s name and mailing address, and the exact payee wording for the check (typically the trustee’s name, “FBO,” and your name).
Request the distribution from your 401(k). On the distribution form, choose “direct rollover,” enter the 457(b) trustee details and your new account number, and specify how much of any pre-tax and Roth balances you want moved.
Submit everything the way each plan requires. Many accept digital uploads; some still want wet signatures by mail.
Watch both accounts. A direct rollover generally takes two to four weeks. Confirm the money has left the 401(k) and arrived in the 457(b).⁵
Verify the posted amount and categorization (pre-tax rollover versus Roth rollover). Flag any discrepancy with the 457(b) administrator right away.

A note on contribution limits: a rollover does not count against the 457(b) annual deferral limit. You can still contribute up to the full limit for the year on top of whatever rolls in.¹²

One boundary worth knowing: some 401(k) plans require a spouse’s notarized written consent before releasing funds. This is more common with pension-type plans than with ordinary 401(k)s, but ask your 401(k) administrator early so a notary appointment doesn’t delay you.¹³

What to Expect at Tax Time

A direct rollover is not a taxable event, but it is a reportable one. Your 401(k) provider will send a Form 1099-R for the year of the distribution, with code G in Box 7 marking a direct rollover and a zero in Box 2a for the taxable amount.¹⁴ Report the gross distribution on your return, show zero taxable, and keep the 1099-R, the 457(b) rollover confirmation, and any correspondence between the two plans in your tax file in case the IRS asks.

If you went the indirect route, the 1099-R will show the 20% withholding. You’ll claim credit for that withholding on your return and need to show the full amount landed in the 457(b) inside the 60-day window.

RMDs on the Combined Balance

Once the money is in the governmental 457(b), it is subject to that plan’s required minimum distribution rules along with everything else. RMDs generally start by April 1 of the year after you turn 73.¹⁵ If you are still working for the government employer that sponsors the 457(b), you can delay RMDs from that specific plan until the year you retire. Roth money in a designated Roth 457(b) account is not subject to lifetime RMDs; pre-tax rollover money follows the standard schedule.

1
Office of the Law Revision Counsel. 26 USC 457 – Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations
2
Office of the Law Revision Counsel. 26 U.S. Code 402 – Taxability of Beneficiary of Employees Trust
3
Internal Revenue Service. Rollover Chart
4
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
5
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
6
Internal Revenue Service. Topic No. 413, Rollovers From Retirement Plans
7
eCFR. 26 CFR 1.402(c)-2 – Eligible Rollover Distributions
8
Internal Revenue Service. IRC 457(b) Deferred Compensation Plans
9
Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
10
Internal Revenue Service. Notice 2013-74
11
Internal Revenue Service. Safe Harbor Explanations – Eligible Rollover Distributions
12
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
13
U.S. Department of Labor. FAQs About Retirement Plans and ERISA
14
Internal Revenue Service. Instructions for Forms 1099-R and 5498
15
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs