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EllenE writes:

<<...when you leave that job the money cannot be transferred to an IRA. It will be paid to you and fully taxed at ordinary income tax rates at that time.>>

Um, I don't know about this. When I left my last government job, I had the option of taking my deferred comp out, or leaving it be in the account until I retired. I chose to leave it be, and was then able to roll it over, IRA-style, into the deferred comp program under my new gov. job.

That's different. To avoid taxation you left the money in the old 457 plan. You later continued tax deferral by transferring the money to a new employer's 457 plan. In effect, you haven't taken a distribution yet. When you do or must, you cannot transfer the money to an IRA. You must take it, and when you do you will pay ordinary income taxes on the sum taken.

And BTW...Not all 457 plans will allow you to leave the money there when you depart employment. The fact that yours did was just a fortunate circumstance.

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