Since your 401(k) is tied to your employer, when you quit your job, you won’t be able to contribute to it anymore. But the money already in the account is still yours, and it can usually just stay put in that account for as long as you want — with a couple of exceptions.

Can I withdraw from my 457 while still employed?

The 457 plan is a retirement savings plan and you generally cannot withdraw money while you are still employed. When you leave employment, you may withdraw funds; leave them in place; transfer them to a 457, 403(b) or 401(k) of a new employer; or roll them into an Individual Retirement Account (IRA).

Can a contractor contribute to both a 401k and a 457 plan?

Both public government 457 plans and nonprofit 457 plans allow independent contractors to participate. Independent contractors are not eligible to participate in 401(k) plans, however. As 457 plans are nonqualified retirement plans, it is possible to contribute to both a 401(k) and 457 plan at the same time.

What are the drawbacks of a 457 plan?

457 plans allow individuals to withdraw funds early without having to pay the 10% early withdrawal penalty imposed on 401(k) or 403(b) holders, but only in the event that they switch employers. The drawback with a 457 plan is its strict age-related distribution limitations.

When to take money out of 457 plan?

However, 457 plans are a type of tax-advantaged nonqualified retirement plan and are not governed by ERISA. As ERISA rules do not apply to 457 accounts, the IRS does not assess an early withdrawal penalty to 457 participants who take money out before age 59½, though the amount taken is still subject to normal income taxes. 7 

What are the rules for rollover of a 401 ( a ) plan?

401 (a) Rollover Rules 401 (a) rollover rules are similar to what they are for the rollover of other tax-sheltered retirement plans. You can roll the proceeds of the plan over to the qualified plan of another employer (if the future employer accepts such rollovers), or into a traditional or self-directed IRA account.