Transfer/Rollover a 457(b) governmental plan to a solo 401k

BACKGROUND/QUESTION: I’m self employed and would like to open a solo 401k to make ongoing annual contributions as well as transfer my former employer 457(b) governmental plan. However, I can’t find any information that states a 457(b) can be transferred to a solo 401k.  Do you know if a 457b can be transferred to a solo 401k plan?

ANSWER:  Good question. Not all 457(b) plans can be transferred to a solo 401k or an IRA. You first have to identify the type of 457(b) that you participate in.

There are two types of 457(b) plans:

Type 1: Tax-Exempt 457(b) plan–this type cannot be transferred to a solo 401k or an IRA.

Type 2: Governmental 457(b) plan– this type can be transferred to a solo 401k plan or an IRA.

See: https://www.irs.gov/retirement-plans/comparison-of-tax-exempt-457b-plans-and-governmental-457b-plans

In sum, as a result of Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), which greatly increased retirement plan and IRA portability rules, a Governmental 457(b) plan can be transferred to a solo 401k plan or an IRA; however, a Tax-Exempt 457(b) plan is still restricted from being transferred to a solo 401k plan or an IRA.

 

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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