Can I Transfer My 457 to Another Company? Rules, Rollover Steps, and Taxes

You can transfer a 457 to another company’s retirement plan, but what’s allowed depends on whether your 457(b) is governmental or non-governmental. A governmental 457(b) can roll into a traditional IRA, a Roth IRA, a 401(k), a 403(b), or another governmental 457(b).¹ A non-governmental 457(b) is much more restricted and can generally only move to another non-governmental 457(b). The plan type, the method you use, and the account on the receiving end together decide whether the move stays tax-deferred or becomes a taxable event.

First, Find Out Which Type of 457(b) You Have

This is the single most important question in the whole process, and getting it wrong creates an immediate tax bill.

Governmental 457(b) plans are offered by state and local governments and have broad rollover flexibility. Permitted destinations include a traditional IRA, a Roth IRA (with income tax owed on the converted amount that year), another governmental 457(b), a 401(k), or a 403(b).²

Non-governmental 457(b) plans, sometimes called “Top Hat” plans, are offered by tax-exempt organizations to highly compensated employees.³ These assets technically belong to the employer until distributed and remain exposed to the employer’s creditors. The IRS does not permit rollovers from a non-governmental 457(b) into an IRA, 401(k), or any other plan type. The only allowed destination is another non-governmental 457(b).¹

If non-governmental 457(b) money accidentally gets rolled into an IRA or 401(k), the entire amount becomes taxable income for that year. Federal income tax rates run from 10% to 37%, so a large balance could easily push you into a higher bracket.⁴ Your Summary Plan Description will confirm which type you have. If anything is unclear, ask HR before you sign a form.

When You’re Allowed to Move the Money

The event that unlocks a transfer is leaving your job — resignation, retirement, or termination. Federal law calls this a “severance from employment.”⁵ Until that happens, the money is generally locked in the plan. Two exceptions exist: an unforeseeable emergency, such as catastrophic medical bills or a natural disaster, and reaching a specific age while still employed.

For governmental 457(b) plans, the SECURE Act lowered the in-service distribution age to 59½, though each plan can choose whether to adopt that provision. For non-governmental 457(b) plans, the age threshold is 70½.⁵ Check your plan document for the age that applies to you.

Once you’ve had a qualifying event, you can leave the money in the old plan, move it to a new employer’s plan, or roll it into an IRA. Doing nothing is always an option, but you’ll be dealing with a former employer’s rules and investment lineup indefinitely.

Direct Transfer vs. Indirect Rollover

You have two ways to move the funds, and they carry very different risks.

Direct Rollover (Trustee-to-Trustee)

In a direct rollover, your old plan sends the money straight to the new plan or IRA custodian. The check is made payable to the new institution “for the benefit of” your account, not to you personally.⁶ Because the money never passes through your hands, nothing is withheld for taxes and there’s no 60-day clock. This is the method most financial professionals recommend.

Indirect Rollover (60-Day Rollover)

In an indirect rollover, the plan sends the money to you. The administrator is required to withhold 20% for federal taxes right off the top, even if you intend to roll the full amount over.⁶ You then have 60 days from the date you received the distribution to deposit the full original amount, including the 20% that was withheld, into an eligible retirement account.

Say your 457(b) distributes $50,000 and the administrator withholds $10,000. You receive a check for $40,000. To avoid tax on the full amount, you must deposit $50,000 into the new account within 60 days, covering the $10,000 gap from your own savings. You get that $10,000 back as a tax refund when you file. If you only deposit the $40,000 you actually received, the remaining $10,000 is treated as a taxable distribution.⁶

Miss the 60-day window and the full distribution becomes taxable income. The IRS can waive the deadline in limited circumstances beyond your control, such as serious illness, but a waiver is not something to plan around.

Rolling Roth 457(b) Money

If your 457(b) includes a designated Roth account funded with after-tax dollars, the permitted destinations are narrower than for pre-tax money. Roth 457(b) funds can only go to a Roth IRA or another designated Roth account inside a 401(k), 403(b), or 457(b) plan.² They cannot go into a traditional IRA or any pre-tax retirement account. Any nontaxable amounts must move through a direct trustee-to-trustee transfer.

Roth accounts also carry a five-year holding period before earnings can be withdrawn tax-free. When you roll Roth 457(b) money into a Roth account at a new employer’s plan, the clock may start from the earlier date, meaning the year you first made Roth contributions to the original plan rather than the date of the rollover.⁷ A rollover to a Roth IRA follows that Roth IRA’s own five-year rules, so an existing Roth IRA’s established holding period may apply.

What You Give Up By Rolling to an IRA or 401(k)

Distributions from a governmental 457(b) plan are not subject to the 10% early withdrawal penalty that hits most other retirement accounts before age 59½.⁸ Ordinary income tax still applies, but skipping that extra 10% is a real benefit if you leave a government job before 59½ and need the money.

The exemption only covers funds distributed from a governmental 457(b). Roll the balance into a traditional IRA or 401(k) and later withdraw before 59½, and the standard 10% penalty applies, because IRA and 401(k) rules now govern those dollars. The exemption also doesn’t protect money that was rolled into your 457(b) from another plan type, such as a 401(k).⁸ If early access matters, keeping the money inside a 457(b) is how you preserve it.

Loans and RMDs Can Complicate the Transfer

If you borrowed from your 457(b) and still owe when you leave, most plans require immediate repayment or treat the loan as defaulted. A default produces what the IRS calls a “plan loan offset,” and the offset is treated as a taxable distribution. The offset amount is generally an eligible rollover distribution. If the offset occurs because you left your job, it qualifies as a Qualified Plan Loan Offset, and instead of the usual 60 days you have until your tax filing due date, including extensions, for the year the offset occurred to roll the amount into an eligible retirement plan.⁹ You’d fund the rollover from other savings, since the money was already subtracted from your balance. The cleanest path is to repay the loan before you separate.

Required minimum distributions are the other common snag. Starting at age 73, you must take annual RMDs from a 457(b), though if you’re still working for the sponsoring employer and aren’t a 5% owner, you can delay RMDs until the year you retire.¹⁰ You cannot roll over an RMD. In a year an RMD is due, take that distribution first and roll over only the remaining balance.⁶ Include an RMD in a rollover by mistake and you’ll have to pull it back out of the receiving account and may owe penalties.

How to Actually Complete the Transfer

The paperwork isn’t complicated, but small errors can delay the move by weeks or trigger tax consequences you didn’t want.

Open the Receiving Account First

Set up the destination account at the new employer’s plan or IRA custodian before you contact your old plan. The distribution form will ask for that account’s number, the institution’s legal name, and its mailing address. The receiving institution can also confirm it will accept 457(b) rollover funds, which saves you from finding out there’s a problem after the check has been cut.

Request and Complete Distribution Forms

Get the distribution or rollover request form from your former employer’s HR department or the plan administrator’s website. These forms typically ask for:

Your plan account number and Social Security number
Distribution type — select “Direct Rollover” or “Plan-to-Plan Transfer,” not “lump sum distribution” or “cash out”
The receiving institution’s legal name, address, and Employer Identification Number
FBO designation, so the check is made payable to the new institution “For the Benefit Of” you, with your new account number

The distribution-type field is where most problems start. Choose the wrong option or leave it blank, and the administrator may process a standard cash distribution with 20% federal tax withheld, leaving you scrambling to complete a 60-day indirect rollover to undo it.⁶

Submit and Track the Request

Some administrators accept digital uploads through secure portals; others require mailed originals with wet-ink signatures. Large transfers, especially those moving securities rather than cash, may need a Medallion Signature Guarantee, a stamp from a bank or brokerage verifying your identity.¹¹ Processing usually takes one to three weeks after approval, though electronic transfers can be faster.

Confirming the Transfer and Tax Reporting

You’ll receive a Form 1099-R for the tax year in which the distribution occurred. For a direct rollover to a governmental 457(b), 401(k), 403(b), or IRA, the form should show distribution code “G” in Box 7, which signals a direct rollover that isn’t taxable.¹² You still report it on your return, but no tax is owed on a properly executed direct rollover.

Check the receiving institution’s records to confirm the deposit posted for the correct amount. A short gap between the old plan’s distribution date and the new plan’s deposit date is normal, but a mismatch in the dollar amount is not. If the old plan deducted fees or the check doesn’t match your expected balance, contact the administrator right away. Once both sides reconcile, the money continues growing tax-deferred, or tax-free in the case of Roth funds, under the new plan’s rules.

1
Internal Revenue Service. Comparison of Tax-Exempt 457(b) Plans and Governmental 457(b) Plans
2
Internal Revenue Service. Rollover Chart
3
Internal Revenue Service. Non-Governmental 457(b) Deferred Compensation Plans
4
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
5
Office of the Law Revision Counsel. 26 USC 457 – Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations
6
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
7
Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts
8
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
9
Internal Revenue Service. Plan Loan Offsets
10
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
11
Investor.gov. Medallion Signature Guarantees – Preventing the Unauthorized Transfer of Securities
12
Internal Revenue Service. Form 1099-R 2025 Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.