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457(b) to Roth IRA


Guest Ford

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Is a 'rollover' allowed only one time into my Roth IRA, and out of my 457(B) government deferred comp plan?

I intend to continue employment and plan contributions with my state employer, and rollover again in the future to my private Roth.

Thanks for any suggestions.

--Ford

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First of all, rollovers from retirement plans, including governmental 457 plans, cannot be placed directly into a Roth IRA. Rollovers must first go into a traditional IRA, which may then be converted to a Roth if your AGI is under $100,000 and you're not married filing a separate return.

If you are eligible for a distribution from the 457 plan, that distribution should be eligible for a rollover to an IRA. However, you may not be eligible for a distribution if you're still working for the employer sponsoring the plan. Check with your plan administrator to make certain of the eligibility for distribution and rollover.

Hope this is of some benefit to you.

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Many thanks. I get the sense I am confusing 'rollover' with 'eligibility for distribution'.

My confusion started when the plan started soliciting members to 'rollover' any other eligible funds into their plan while we are still employed.

I jumped to the conclusion that the 'flow' would have to go both ways, i.e., if new money could go into the plan, then old money would have to be able to flow 'out' of the plan, if the goal of the tax law was to make retirement funds portable.

Thanks again for the correction. I'll contact the administrator. Their responses on other recent questions haven't given me a comfort level about the safety of the assets, so I was trying to get my contributions elsewhere.

--Ford

p.s This website is a great resource. Thanks to all who keep it going!

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In order to effect a rollover, you have to be eligible for a distribution from the plan. In this case, in order to roll money from your 457 plan, you have to be eligible for a distribution from that plan.

Last year's tax law also enabled rollovers INto a plan in which you currently participate. In such a situation, you still must be eligible for a distribution from the plan containing the assets to be rolled. However, more than likely, money rolled into a plan is already in an IRA, which can be distributed at any time. Also, in some instances, money is in a plan maintained by a former employer, where severance of employment is usually a trigger that will permit a distribution.

In short, as you've experienced, it's easier to get money into your employer's plan than it is to get out. Bear with the administrator a while longer... some of these rules are brand new and they may not fully understand them quite yet.

Good luck to you. And, I couldn't agree more about this website. It is a tremedous resource of information. Dave Baker does an outstanding job!!!

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