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Governmental 401(a) distribution - rollover?


Guest Newburg
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Guest Newburg

I am trying to respond to a question but have not found a good resource for information on Governmental 401(a) Plans.

A utility district currently has 457(b) and 401(a) plans - same participants in both plans. Since annual contributions in both plans have never exceeded the annual limit of $17,000, the discussion is to continue the 457, and terminate the 401(a).

Can the 457(b) plan accept a rollover distribution from the governmental 401(a) plan?

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Guest GeerTom

Yes. 408©(8)(B)(v) makes governmental 457(b) plans eligible retirement plans.

It will have to be placed in its own separate rollover account in the 457(b) plan. See Regs. 1.457-10(e).

(e) Rollovers to eligible governmental plans—(1) General rule. An eligible governmental plan may accept contributions that are eligible rollover distributions (as defined in section 402©(4)) made from another eligible retirement plan (as defined in section 402©(8)(B)) if the conditions in paragraph (e)(2) of this section are met. Amounts contributed to an eligible governmental plan as eligible rollover distributions are not taken into account for purposes of the annual limit on annual deferrals by a participant in §1.457–4© or §1.457–5, but are otherwise treated in the same manner as amounts deferred under section 457 for purposes of §§1.457–3 through 1.457–9 and this section. </p> <p> (2) Conditions for rollovers to an eligible governmental plan. An eligible governmental plan that permits eligible rollover distributions made from another eligible retirement plan to be paid into the eligible governmental plan is required under this paragraph (e)(2) to provide that it will separately account for any eligible rollover distributions it receives. A plan does not fail to satisfy this requirement if it separately accounts for particular types of eligible rollover distributions (for example, if it maintains a separate account for eligible rollover distributions attributable to annual deferrals that were made under other eligible governmental plans and a separate account for amounts attributable to other eligible rollover distributions), but this requirement is not satisfied if any such separate account includes any amount that is not attributable to an eligible rollover distribution.

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