401a to 457b rollover question

[arizonarad]

Hi guys,

Upcoming grad who has found these blogs and forums extremely helpful.

I was hoping for help with the following:

My wife and I are finishing our training at a state university and have some savings in a 401a.  For a few reasons, the money that is in these accounts will be more valuable to us now than rolling them into a plan with our new employers.  I'm trying to avoid the 10% penalty for withdrawal if at all possible.

My employer also offers a 457b and allows me to rollover my 401a contributions to the 457b.  Am I wrong in thinking I can roll the money from the 401a into the 457b and then withdrawal that after we graduate in July and no longer work for the university without paying the 10% penalty?

 

Thanks for your help.

[jfoxcpacfp]

Nice idea and good question! However, a 457b is required to record rollover assets separately so they will continue to be subject to the 10% penalty on early withdrawal.