Contract Exchange

Subject to plan rules.

No qualifying event is required.

Funds can be sent only to an approved investment provider within the same plan.

No

403(b) plans

457(b) plans

Plan-to-Plan Transfer

Subject to relinquishing and receiving plans' rules.

No qualifying event is required.

Usually used to move money from one employer’s plan to a former or new employer’s plan. Both plans must be the same type—i.e., a 403(b) or 457(b) plan.

No

403(b) plans

457(b) plans

Direct Rollover

(The money goes from your current plan account directly to your new plan account.)

Direct and indirect rollovers from your current employer’s plan to another tax-qualified plan, such as an IRA or a new employer’s plan (if the new plan accepts rollovers), are permitted as follows:

• For 403(b) and governmental 457(b) accounts:¹ 

−   Upon severance from employment (provided the amount is not subject to the required minimum distribution provision).

• For 403(b) accounts only (if plan rules permit):

−   Upon reaching age 59½—even if you are still working for your current employer.

• For governmental 457(b) accounts only (if plan rules permit):

−   For an in-service withdrawal, if the amount is $5,000 or less and no contributions have been made to the account for the prior two years. This is a one-time option only.

−   Upon reaching age 70½ even if you are still working for your current employer.

Yes.

The rollover is reported to the IRS, but is not taxable unless the funds are being rolled into a Roth account. Tax‑deferred amounts transferred to a Roth account will be taxed at ordinary income tax rates. Consult with your tax professional for more information.

403(b) plans

Governmental 457(b) plans

Indirect Rollover

(You receive the money and forward it to your new plan account.)

Yes.

The rollover is reported to the IRS, but is not taxable if you deposit the distribution with the new provider within 60 days from the date you receive it.

403(b) plans have 20% mandatory withholding on indirect rollover distributions. To roll over 100% of the distribution into a new account, you must add in an amount equal to the 20% withheld. If you only roll over the amount you actually receive, you will have to pay taxes—and possibly a 10% federal tax penalty for early withdrawals—on the 20% mandatory withholding amount.