David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:
Yes, but there is a potential disadvantage about which the physician should be aware. Rollovers from governmental 457(b) plans are permitted to a 403(b) plan (as opposed to 457(b) plans of private tax-exempts, which are NOT eligible for rollover). However the physician should be made aware that 457(b) plans are NOT subject to the 10% premature distribution penalty that is generally applicable to distributions taken prior to age 59 1/2. That tax advantage is lost if the funds are rolled over into a 403(b) plan. Thus, if the physician wishes to retire early, she would lose access to a penalty-free distribution from the 457(b) plan if she rolled such funds into a 403(b). Any distribution taken would indeed be subject to the 10% penalty.
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