457 DISTRIBUTIONS restricted
I have a 457 account with the State of Ohio. If I request a distribution I was told the securities are sold on the same day of the month for all participants requesting a distribution. If my account is up at the first of the month, but I they do not sell the securities until the 22nd of the month I can lose a great deal of money when they sell. Can they have that much control over when I sell my securities? There must be tens of thousands of dollars worth of securities being sold in one day. Is this the way all 457 accounts work? It seems to me like a manipulation of the plan assets. Thank you.
Terry Says
That is a VERY unusual and discriminatory provision — but it’s a state plan, so I’m quite sure that they checked and it is legal.
If you are still working for them and participating in the plan, then you must abide by their rules. But . . .If you’re not still working for them, however, you should be able to do a ROLLOVER of the entire amount to a place like Fidelity or Vanguard, creating an IRA rollover account.
Ask the people who run the Ohio plan if that is an alternative you can use. If so, contact Vanguard at 1-800-VANGUARD and ask for their retirement rollover department. They will handle the transaction for you. Don’t take a check! Then you can decide which funds, or perhaps mostly a money market fund, you want to invest in. I’d suggest a conservative allocation, perhaps using an equity-income fund if you’re already retired.
If they do not allow you to do a rollover of your ENTIRE PLAN BALANCE, please write back to me and give me the name/phone number of the person you contacted. It sounds like the basis for a column if they lock in your money even after you’ve left their employment.
