IRC 457 Early Withdrawal Guidelines

There are ways to cash out a 457(b) plan before retirement.

There are ways to cash out a 457(b) plan before retirement.

Government employees who sock their earnings away in a 457(b) plan will find the withdrawal rules a wee bit different than most other retirement plans. Funds may be eligible for early withdrawal without penalty depending on the type of plan, their employment status, and the options provided under the plan.

End of Employment

The peachy part of a 457(b) plan is you can withdraw the money whenever you stop employment no matter how young you are. There is no 10 percent penalty to pay. You will still have to pay regular taxes on the disbursement, so the employer will withhold 20 percent.


Your plan might offer the option to withdraw enough funds to cover an emergency. A flooded house and medical expenses count as emergencies; school tuition and a trip to Paris do not. In short, if you really need the money to survive, you can take the withdrawal. The plan will require you to prove you don't have any other assets you could use instead, or if you'll get insurance funds to pay for the emergency.

Active Military Duty

Employees on active duty military for more than 30 days can access funds just as if they terminated employment. There is a caveat: you can't continue to contribute to your 457(b) plan for 6 months after making this kind of withdrawal.

Small Amounts

If you have a tiny amount of money to withdraw, check the rules of your plan. Plans are permitted, but not required, to allow you to cash out your account if the balance is under $5,000.

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About the Author

Kelly Mroz has more than 12 years of experience as an attorney in family, business and estate matters. She graduated magna cum laude from the University of Pittsburgh School of Law, where she served as an associate editor for the "Journal of Law and Commerce." Mroz's work has also been published in the "Pennsylvania Family Law Quarterly."

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