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How should I pay taxes on lump sum distribution


Guest morasp

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Guest morasp

I have a 457 account and would likde to take a distribution and pay the taxes on the the money. The plan administrator said he needs to withold 20% for taxes. Isn't it better to pay the taxes with outside after tax money? How can I do this?

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I have a 457 account and would likde to take a distribution and pay the taxes on the the money. The plan administrator said he needs to withold 20% for taxes. Isn't it better to pay the taxes with outside after tax money? How can I do this?

Do you work for a non profit or a public employer? if you work for a public employer you can rollover the funds to an IRA and not pay any tax. If you work for a NP there is no rollover option and your benefits will be taxed as w-2 income and subect to wage witholding, not 20% tax withholding.

This assumes that you participate in a 457(b) plan.

mjb

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