You do not have to take your money out of the Commonwealth's 457 Deferred Compensation Plan when you retire or terminate employment. You can leave your money in the plan until you are age 73, when you are required to take minimum distributions. Keeping your money in your 457 Deferred Compensation Plan may provide you with potentially more cost-effective retirement opportunities than rolling your money into a traditional IRA.

Why keep your assets in the plan? Several considerations are found in the Leaving Employment Guide  .

Distribution Options

The Commonwealth's 457 Deferred Compensation Plan offers a variety of distribution options to suit your needs. Most distribution options can be changed at any time. You can log in to your account and select Withdrawals to request a full, partial, installment, or required minimum distribution (RMD) from your account.

Distribution options Include:

• Full lump-sum distribution
• Partial lump-sum distribution
• Periodic payments (monthly, quarterly, semi-annually or annually)
• Partial lump-sum distributions combined with periodic payments
• Purchase of an annuity with all or a portion of the account balance
• Roll over into an eligible retirement plan such as a 401(a), 401(k), 403(b), governmental 457(b), traditional IRA or Federal Employees Thrift Savings Plan that accepts such rollovers.*

No IRS Penalty

Unlike many retirement savings plans, there is generally no early withdrawal penalty for distributions from the plan. Once you leave employment with the employer that sponsors the plan, you may take distributions from the plan, regardless of your age.

Distributions are subject to federal income tax and state income tax, depending on the state in which you reside at the time of distribution. Roth (after-tax) contributions and earnings may be withdrawn tax free as long as certain requirements are met.

Consolidation Options

The Commonwealth of Virginia 457 Plan accepts incoming rollovers of pre-tax money from other eligible retirement plan such as a 401(a), 401(k), 403(b), 457(b), traditional IRA or Federal Employees Thrift Savings Plans as long as you maintain a balance in the plan. In addition, the plan will accept incoming designated Roth account rollovers from 401(k), 403(b), and 457(b) Plans. Certain after-tax rollovers are permitted into the Deferred Compensation Plan. However, balances from Roth IRAs cannot be rolled over into the plan. For additional information on consolidation, contact your VRS Defined Contribution Plans Retirement Specialist.

*An IRS penalty for withdrawals from these plans prior to age 59½ may apply. Check with the plan that you are rolling into to ensure it accepts such rollovers. The IRS penalty for early withdrawals does not apply to monies withdrawn from a 457(b) Plan.