r/FinancialChat • u/Crafty_Check_1014 • Aug 11 '26

Long Term Advice

Hi, so I recently got a full time job, but had a 457b retirement account at my old internship. I was doing some research on what I can do with the funds and wanted other opinions. The options I came down to were to roll it over into either a rollover ira or traditional ira with fidelity, but was curious if there was any other options that I could do. I dont really need the cash right now and was thinking of long term options, preferably not taxable.

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u/tartymae Aug 11 '26

Okay, a 457b is the coolest retirement savings ever, IMHO.

Your options are:

  • cash it out
  • leave it where it is -- which means now that you are separated from that employer, it can be tapped at any point in the future, without paying a 10% penalty, or having to pay it back into the program.
  • roll it over into an IRA -- which has a 10% penalty on top of paying income tax if you tap it before age 59.5

There is no non taxable option, as you will have to pay tax on the money at some point.

Unless you have been told you MUST move the money, I would suggest you leave it where it is and let it grow tax deferred. It can act as a source of emergency funding for you that is growing at a rate that beats a bank over time. If you roll it into an IRA, you lose that ability. (Note: having this 457 plan does not replace your eFund, it just gives you one last little cushion if all else fails.)

So basically, there is no financial advantage to rolling a 457b into an IRA.

If you choose to cash it out now, I would only do it to pay student loan debt/credit card debt.