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457 Distributions

Q: A participant in a governmental 457(b) plan rolled money from a 401(k) plan into his 457 plan. Is it correct that a distribution of the 401(k) assets from the 457(b) would be exempt from the 10% premature distribution penalty as long as the participant was at least age 55 in the year he separated from service with his 457 plan employer?

A: Yes, if any one of the exceptions to the penalty tax (include attainment of age 55 or later in the same year as severance of employment) applies, then, there would be no penalty tax on the 401(k) amount rolled into the 457(b) plan.

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