OPERS and Ohio Deferred Compensation 457 Plan: Rollover and Retirement

What the Ohio 457 Plan Is

The Ohio Public Employees Deferred Compensation Program — commonly called Ohio 457 or Ohio DC — is a voluntary supplemental retirement savings plan available to employees of OPERS-covered employers. It's a 457(b) plan under the Internal Revenue Code, administered through ohio457.org.

The 457 plan runs parallel to your OPERS pension. Your OPERS contributions (10% for state and local, 13% for law enforcement) fund the defined benefit pension. The 457 plan is extra — you elect a contribution amount from your paycheck, choose investment options within the plan, and the balance grows tax-deferred until withdrawal.

For 2026, Ohio DC lists a regular 457(b) contribution limit of $24,500. Its age-based catch-up limits are $32,500 for ages 50–59 or 64 and older, and $35,750 for ages 60–63. Eligible participants can use a special three-year catch-up limit of up to $49,000 before the plan's normal retirement age; the rules require coordination with Ohio DC.

Rolling Your PLOP Into the 457

If you elect a Partial Lump-Sum Option Payment at OPERS retirement, one of the smartest tax moves is rolling the PLOP directly into your Ohio 457 account (or an IRA — but the 457 has an advantage discussed below).

A direct rollover from OPERS to the 457 plan avoids the mandatory 20% federal tax withholding that applies to cash PLOP distributions. The full amount transfers tax-free. You owe no income tax until you withdraw from the 457 account.

One potential advantage over a traditional IRA is that distributions from a governmental 457(b) generally are not subject to the 10% early-distribution tax. The exception is amounts attributable to rollovers into the 457(b) from another type of plan or an IRA. Because a PLOP rolled from OPERS is a rollover from another plan, do not assume those dollars can be withdrawn before age 59½ without the additional tax. Confirm how Ohio DC tracks the rollover amount before planning early withdrawals.

To set up the rollover, you designate the Ohio Deferred Compensation Program as the receiving institution on your OPERS retirement application's PLOP election section. OPERS sends the funds directly to Ohio DC — the money never passes through your hands, which is what keeps it from being treated as a taxable distribution.

Coordinating 457 Withdrawals With Your Pension

Once you're retired, you have three income streams to coordinate: your OPERS monthly pension, Social Security (if eligible), and your 457 account.

Pension income is fixed apart from any COLA under OPERS rules. COLAs are capped at 3% and calculated on the initial base benefit; the amount is not otherwise changed unless your plan of payment has a pop-up event.

457 withdrawals are flexible. You choose when to withdraw and how much. Some retirees set up systematic monthly distributions from their 457 to supplement the pension. Others keep the 457 untouched as a reserve for healthcare costs, home repairs, or inflation hedging.

The coordination question is tax-driven. The taxable portion of your OPERS pension is generally taxed as ordinary income, as are taxable 457 withdrawals. Combined, they determine your federal tax bracket and whether your Social Security benefits become partially taxable (up to 85% of SS benefits are taxable above certain combined income thresholds).

A common strategy: keep 457 withdrawals low in years when you're already receiving the pension, then account for required minimum distributions when your applicable IRS required beginning date arrives. But this depends on your total financial picture — the 457 plan doesn't require RMDs until that date, so you have some flexibility.

If You Didn't Contribute to the 457

Many OPERS members never signed up for Ohio DC during their working years. That's fine — the plan is voluntary, and plenty of public employees rely solely on their OPERS pension and Social Security.

But if you're approaching retirement without a 457 balance, consider starting contributions in your final working years, even at modest amounts. Pre-tax contributions reduce your current taxable income; Roth contributions do not. This may matter during your highest-earning years (when your FAS is being calculated — though 457 contributions don't reduce earnable salary for OPERS purposes). A 457 account may also serve as a rollover destination for a PLOP, avoiding the 20% withholding on a direct cash payment.

Even a $500/month contribution for your last two years of employment puts $12,000 into the account — and once the PLOP rolls in, the balance becomes your flexible supplement.

Not the Same as a 403(b) or 401(k)

Some Ohio public employers also offer 403(b) or 401(k) plans. These are different from the 457 and have different withdrawal rules — notably, 401(k) and 403(b) withdrawals before age 59½ do carry the 10% early penalty (with limited exceptions). If you have multiple supplemental accounts, know which is which before planning your post-retirement income.

The full breakdown of PLOP mechanics, rollover steps, and plan of payment options is in the OPERS Retirement Guide.

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