Chartered Retirement Planning Counselor (CRPC) Practice Exam 2026 - Free CRPC Practice Questions and Study Guide

The correct answer is that participants in a 457 plan cannot receive deferrals before the age of 70½. This is due to the provisions outlined in the Internal Revenue Code related to deferred compensation plans, particularly how they govern the withdrawal of funds.

For 457 plans, the distribution rules allow participants to take distributions at various points, but specific tax implications and penalties apply depending on the age of the retiree. The age of 70½ is significant in this context because it was traditionally the age at which individuals were required to start taking required minimum distributions (RMDs) from their retirement accounts. While the rules surrounding RMDs have changed slightly since the introduction of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, the withdrawal age for penalty-free distributions from a 457 plan remains linked to the traditional definition surrounding retirement eligibility and tax considerations at that age.

Therefore, those younger than 70½ may find that they face additional conditions or penalties when attempting to withdraw or access funds from their 457 deferred compensation plans.