457 mandatory government job, not invested, can’t move to 401k?

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  • #94155 Reply

      I have a mandatory 457 through my job with a city government. The money doesn’t earn interest and is not invested and I can only access it once I leave this job which I would not like to leave anytime soon. Has anyone found a way around something like this? It has been withholding from my paycheck for a few years. The financial advisor at work told me I can’t move it to my 401k.

      Also will this affect contributions I make to a Roth? This isn’t a real retirement account right?

      #94156 Reply

        457 generally can be invested I’d double check with the plan administrator about how you can go about that or what the options are. Even if it’s not invested it should at least be in a settlement account earning some interest.

        #94157 Reply

          I agree with others that this does not make sense.

          You may have a pension that has a mandatory contribution. These are not “invested”, but are used to fund the pension system, which is a defined benefit plan.

          The 457 is a defined contribution plan, and you should be able to contribute to it, or not, as well as invest it, or not. Some agencies have set up a percentage contribution by default, because they have found more people will invest in their retirement this way (requiring an opt-out) over having to set it up themselves (requiring opt-in).

          While I don’t have a 457, I do have both a pension (defined benefit) and TSP (fed version of 401k, defined contribution).

          Hopefully you hear back soon, and the confusion will have been due to a misunderstanding.

          Suggested: 457 vs. rental sale for multigenerational home down payment?

          #94158 Reply

            Also, in government your 457 should absolutely be invested and growing mine does. Should have started contributing sooner but that’s a different story.

            Good luck in your journey!

            #94159 Reply

              A couple of questions/terms to look into. You’re sure it’s a 457, right? I’ve heard of 401(a) plans having mandatory contributions and no way for employees to adjust the amount. Might you have a 401(a) and a 457?

              Do you have an account login where you can see your account balance? Have you explored it to see if there’s a way to invest the funds? Some employer-sponsored retirement plan websites are completely obnoxious- I saw one where the participant had to click on “Change Contributions” 4-5 times on 4-5 different pages before they got to the actual screen that showed the investment options.

              The advisor is probably correct about not being able to roll it out while you’re still working there. This is plan-dependent, but it’s common to not offer in-service distributions.

              Lastly, ask if your plan has a Summary Plan Description. I know this is the term for a 401(k) plan’s documentation. The SPD (or similar) will tell you all the details of the plan- in-service distributions, fees, Traditional vs Roth options, etc etc.

              When you asked if this affects contributions you make to a Roth, if you mean Roth IRA, then no, it’s doesn’t affect that. The limits for a 457, a 401(k), and an IRA are all separate. If you have access to all three and can afford to max them all out, the IRS code allows it.

              Worth a look: 401k rollover after job loss: Roth or traditional IRA?

              #94160 Reply

                I’ve never heard of a mandatory 457. Are you sure this account isn’t a pension? Not having a choice but to contribute and not being able to invest your contributions plus city government sounds like you are describing a pension.

                #94161 Reply

                  I’ve never heard of a 457b that cannot be invested. I don’t think you are getting the right information.

                  #94162 Reply

                    A 457 is a retirement account. You can actually max a 457 and a 401k or 403b and an IRA.

                    I cannot imagine the money isn’t investable though, that makes no sense.

                    #94163 Reply

                      I would encourage you to check your information because none of this seems right.

                      #94164 Reply

                        Since you’ve said this plan is held at Fidelity, why not contact them directly? Maybe a different person at fidelity than the one your workplace has connected you to can give you more information about your plan. There should be some plan documentation and details they can share. It’s very odd that they told you it can’t be invested or earn any sort of interest.

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