457 rollover ?

[Guest thestockman]

Does anyone know if a person who has previously elected a life annuity choice, ( because realistically what other choices were available ) from their 457 plan at retirement - will they now have the flexability to amend the prior choice, given that they can now roll a lump sum into an IRA:

1) without tax consequences

2) be given greater choices in investments and payout options as compared to previous choices

It just seems that there would be some form of a window allowed for people that had no other choces before. Perhaps I'm the ignorant person and they did have other choices? Just trying to learn from this end.

Can anyone share some input with perhaps some reference material I can obtain?

Thanks - Shawn

[Guest cron55]

In essence, when a participant selects an annuity payout of any type (Straight Life, Life & 10, Joint & Survivor, etc.) and payments begin, that participant (now an annuitant) has taken the accumulated assets within the retirement plan account and purchased an income stream.

When this occurs, the participant has lost control of the accumulated principal and is then unable to access or modify those funds in any manner. I call this "Annuicide". Can this be avoided? Yes, but it involves either amending the previously adopted Plan Document to include additional payout provisions/investment products or the adoption of a new plan document to "piggy-back" the original plan.

In either case, those changes will only apply to future retirees. Retired participants cannot rollover the annuity payment stream because they no longer own the assets that fund the payout.

This issue has been a "sore spot" with me for years and I will soon be making available a 457(B) plan which will allow the participant and their beneficiaries to maintain control of those assets into and throughout the benefit payout period.