Do 457 Plans Have RMDs? Timing, Exceptions, and Penalties

Governmental 457(b) plans do have required minimum distributions, and they follow the same rules as 401(k)s, 403(b)s, and traditional IRAs, with withdrawals generally starting at age 73.¹ Non-governmental 457(b) plans, offered by tax-exempt employers like hospitals and private universities, are non-qualified deferred compensation arrangements and do not use the age-based RMD system at all. Distributions from those plans follow whatever schedule the plan document specifies.² Which type of 457(b) you have controls almost every answer that follows.

When Governmental 457(b) RMDs Begin

If you participate in a state or local government 457(b), your required beginning date is April 1 of the year after you turn 73. That age applies if you were born between 1951 and 1959. For anyone born in 1960 or later, the RMD age rises to 75, but that change takes effect in 2033.³

The first-year timing catches people off guard. Your very first RMD can be delayed until April 1 of the year after you reach RMD age, but your second RMD is still due by December 31 of that same year. Using the April grace period means two taxable withdrawals land in the same calendar year, which can push you into a higher bracket.

How the RMD Amount Is Calculated

Take your account balance as of December 31 of the prior year and divide it by your life expectancy factor from the IRS Uniform Lifetime Table. A different table, the Joint Life and Last Survivor Table, applies when your sole beneficiary is a spouse more than ten years younger than you, and it produces a smaller required amount.⁴

A quick example. A $400,000 balance on December 31, divided by a Uniform Lifetime factor of 26.5, produces an RMD of about $15,094. The factor shrinks as you age, so the required percentage climbs each year even if the balance stays flat.

One important limit: unlike IRAs, employer plans do not allow aggregation. You must calculate and withdraw the RMD from each 457(b) account separately, and you cannot use a 401(k) withdrawal to satisfy a 457(b) RMD or the other way around.⁵

The Still-Working Delay

If you are still employed by the government agency that sponsors your 457(b), you can delay RMDs from that plan until April 1 of the year after you actually retire, even past age 73.¹

The exception only applies to the plan of your current employer. An old 457(b) from a previous government job does not get the delay; you either start RMDs on the normal schedule or roll it into your current employer’s plan. Rolling a 401(k) or traditional IRA balance into an active governmental 457(b) can also shelter those funds under the still-working exception, which is a legitimate strategy for people working past 73.

Roth 457(b) Accounts

Starting in 2024, designated Roth accounts inside governmental 457(b) plans are no longer subject to RMDs during the participant’s lifetime. SECURE 2.0 eliminated the RMD requirement for all designated Roth accounts in employer-sponsored plans, putting them on equal footing with Roth IRAs.¹ Before that change, participants had to either take Roth RMDs or roll the balance into a Roth IRA to avoid them.

This applies only to the Roth portion. Pre-tax dollars in the same plan still follow the normal RMD rules, and beneficiaries will face distribution requirements after your death regardless of whether the account holds Roth or pre-tax money.

Non-Governmental 457(b) Plans Work Differently

Employees of tax-exempt organizations participate in a fundamentally different kind of 457(b). These are non-qualified plans, and no age-based RMD system applies.² Distributions instead follow the schedule the plan document lays out, typically triggered by separation from service or a date you selected in the deferral agreement before the compensation was earned. There is no required beginning date tied to your birthday and no IRS excise tax for missing one.

The flexibility comes with a real cost. The money is not held in trust. It remains the property of your employer and is reachable by the employer’s general creditors in a bankruptcy or lawsuit until it is actually paid to you.² Once a distribution event occurs, payments must follow the pre-determined schedule; deviating from it, or failing to make a timely election, can cause the entire deferred balance to become taxable at once. Non-governmental 457(b) balances also cannot be rolled into an IRA, a 401(k), or a governmental 457(b).

Inherited 457(b) Accounts

When a governmental 457(b) participant dies, most non-spouse beneficiaries must empty the account by the end of the tenth year after the year of death.⁶ Certain eligible designated beneficiaries can still stretch withdrawals over their own life expectancy:

A surviving spouse can take distributions over their own life expectancy, delay until the deceased would have reached RMD age, or roll the account into their own IRA or retirement plan.
A minor child of the participant can stretch distributions until reaching the age of majority, at which point the 10-year clock begins.
A disabled or chronically ill individual can use the life expectancy method.
A beneficiary who is not more than 10 years younger than the participant can also use life expectancy.

Everyone else, including adult children, siblings, friends, and most trusts, falls under the 10-year rule. There are no required annual withdrawals in that case, just the hard deadline to empty the account.⁶

Penalty for Missing an RMD

Miss the deadline on a governmental 457(b) RMD and the IRS charges an excise tax of 25% on the shortfall.⁷ The penalty drops to 10% if you correct the mistake within the correction window, which generally runs through the end of the second tax year after the year the penalty applies.

You report the penalty on IRS Form 5329, and the same form is used to request a waiver. If the missed distribution resulted from a reasonable error, such as a plan administrator’s mistake or a serious illness, attach a written explanation describing the error and the steps you’ve taken to fix it.⁷ Waivers are granted regularly when the facts support them, but you must actually take the missed distribution before or at the time you file.

A Note on 457(f) Plans

The 457(f) is a separate arrangement that sometimes gets confused with the 457(b). These are ineligible deferred compensation plans, typically used by tax-exempt employers for executives and key employees. Standard RMD rules do not apply. Deferred amounts become taxable in the first year there is no substantial risk of forfeiture, meaning the year your rights to the money are no longer conditioned on future service or performance.⁸ The tax event is vesting, not distribution, so nothing in the RMD framework above applies.

1
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
2
Internal Revenue Service. Non-governmental 457(b) Deferred Compensation Plans
3
Congressional Research Service. Required Minimum Distribution (RMD) Rules for Original Owners of Retirement Accounts
4
Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
5
Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
6
Internal Revenue Service. Retirement Topics – Beneficiary
7
Internal Revenue Service. Instructions for Form 5329 (2025)
8
Office of the Law Revision Counsel. 26 U.S. Code 457 – Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations