Q. An agent with a product provider insists that an employee can take distribution from his 457(b) plan and roll it over into the same employer’s 403(b) plan when he is not age 70 ½ and is still actively employed with that employer. The agent says there is new guidance making this permissible. Do you know of any such guidance?
A. No such guidance has come to my attention; however, there is one additional rule for 457(b) plans which could permit such a rollover. If the plan document permits, an employee who has less than $5,000 in the 457 account AND who has made no contributions for the two years before the distribution, is eligible to take that distribution and roll it into the 403(b) plan. Two caveats — the 403(b) plan document must permit rollovers into the plan, and the exception can be used only once.