457(b) Distribution

[waid10]

We had an executive sever employment. His 457(b) paperwork with distribution options was sent to his home. Executive was away for a long period of time. Executive's spouse was home but never opened the mail with his 457(b) paperwork. We paid out the 457(b) account in lump sum. Now Executive has returned and wants to know if there are any options for returning the money to the Plan or rolling it over.

Any ideas?

[mbozek]

We had an executive sever employment. His 457(b) paperwork with distribution options was sent to his home. Executive was away for a long period of time. Executive's spouse was home but never opened the mail with his 457(b) paperwork. We paid out the 457(b) account in lump sum. Now Executive has returned and wants to know if there are any options for returning the money to the Plan or rolling it over.

Any ideas?

1. Was this payout automatic based on a prior election? Was benefit paid in accordance with terms of plan? If answer is yes then employee is taxed because funds were received.

2. If the employer is a NP the only option to avoid tax is to transfer funds to another NP 457b plan. Otherwise it is a taxable distribution b/c rollover to an IRA is not available. If 457b is sponsored by a government then funds can be rolled over to an IRA or employer plan.

[waid10]

We had an executive sever employment. His 457(b) paperwork with distribution options was sent to his home. Executive was away for a long period of time. Executive's spouse was home but never opened the mail with his 457(b) paperwork. We paid out the 457(b) account in lump sum. Now Executive has returned and wants to know if there are any options for returning the money to the Plan or rolling it over.

Any ideas?

1. Was this payout automatic based on a prior election? Was benefit paid in accordance with terms of plan? If answer is yes then employee is taxed because funds were received.

2. If the employer is a NP the only option to avoid tax is to transfer funds to another NP 457b plan. Otherwise it is a taxable distribution b/c rollover to an IRA is not available. If 457b is sponsored by a government then funds can be rolled over to an IRA or employer plan.

Yes, payout was based on terms of the plan. There is no dispute that payout was proper and that tax withholding was proper too. The employer is a non-profit.