EGTRRA - 457 Rollovers into qualified plan

[Guest Paul Hinderegger]

I am aware that starting in 2002, rollover contributions from a governmental 457 plan may be rolled over into a qualified plan provided that the qualified plan separately account for the 457 rollover. I have three questions:

1) I assume that the reason for the "separate accounting" rule is because upon distribution of the 457 rollover from the qualified plan, the 457 rollover is exempt from the 10% early distribution tax under 72(t). Can someone please confirm?

2) Will the exemption from the 10% early distribution tax apply to the principal amount of the 457 rollover only, or to the earnings on the 457 rollover as well? In other words, if a participant rolls over $20,000 into a qualified plan in January 2002 and the money has appreciated to $30,000 when it is distributed in December 2002 upon the participant's termination, what amount is exempt from the 10% early distribution tax?

3) Do you expect a new Box 7 code on the Form 1099-R to identify distributions of 457 money?

Thanks for your help.