Tax-Exempt 457(b) Distributions

[Guest jcorona]

We currently administer tax-exempt 457(b) plans and are looking to streamline the distribution process. I have found where we can act as payor of these distributions and withhold a flat rate of 25% as opposed to returning the funds to the employer and have them process these payments. If we elect to do so, would we report our EIN as payor on a the W-2? Additionally, at any point can we report these on a Form 1099-MISC since these are non-employees to our firm? Any assistance would be much appreciated!!

[Guest dietpepsi]

My company also provides this service. We require the employer to complete IRS Form 2678 and then we report the distributions on a W2 under our EIN. Hope that helps.

[Belgarath]

Diet - I don't know what the old 2678 prior to revision looked ike, but can you now use it to do a W-2 for the employer? doesn't look like it?

http://www.irs.gov/pub/irs-pdf/f2678.pdf

[mbozek]

My company also provides this service. We require the employer to complete IRS Form 2678 and then we report the distributions on a W2 under our EIN. Hope that helps.

How is it possible to file a W-2 for an employee of another employer under your EIN especially since you are not an employer eligible to maintain a 457 plan and Form 2678 does not authorize such a designation? Also how do you fill in the block as to whether the employee participates in an employer retirement plan if the employee does not work for you?