Actually, you've got two different questions here. The first is what the plan itself says. Even if a particular form of distribution would be legal, a plan is not required to offer it.
Second is the restrictions on distributions imposed on 457 plans by the Internal Revenue Code. Under those rules, distributions cannot be made earlier than
(i) when the participant attains age 70½,
(ii) when the participant separates from service, or
(iii) when the participant faces an unforeseeable emergency. They must begin by the later of the April 1 of the year following the year
(i) when the participant attains age 70½, or
(ii) when the participant retires. There are additional, sometimes quite complicated rules regarding how fast the distributions must be made, and what happens in the event the participant dies.
The primary penalty for failing to make distributions when required is I.R.C.
§ 4974, which imposes a 50% excise tax on the participant for failure to take required distributions. Although in theory the plan could also lose its
457(B) status for failure to make required distributions, such loss of
457(B) status would apply only if the plan failed to correct its procedures after the IRS notified it of the problem. Treas. Reg.
§ 1.457-2(l). ------------------
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