457 Rollover

[MGOAdmin]

Are you able to roll money out of a qualified 457 plan into an IRA , even if the 457 plan is not related to a goverment but to a non-profit?

I found some language that rollovers are only permitted for 457 plans under a state or local govemnment but not a non-profit.

[Belgarath]

Correct. The non-governmental plans have no rollover options available, although they can permit direct transfers to another tax-exempt entity 457(b) plan.

[jaxon1225]

We have a non-governmental 457(b). What if our 457(b) Plan Document is silent in regard to permitting transfers to another tax-exempt entity? Would they still be allowed or does the document need to specify this? Thank you.

[QDROphile]

Both the sending and receiving plans should have terms for transfers. If the sending plan does not have terms for a transfer, how can you tell that departing funds are not a distribution, which is the only thing the plan describes that fits with departing funds?

[Belgarath]

If the transferring plan is silent on the issue, then I would say that such a transfer is not permissible. Take a look at 1.457-10(b)(5) - one of the requirements is that the transferor plan must provide for the transfer.

[Good401(k)]

Anyone have the specific Code Citation disallowing the rollover of non-governmental 457(b) funds to qualified plans (e.g. 401(k)s, IRAs, 403(b)s, etc).?  Much appreciated.

[XTitan]

457(d)(1)(C) is the citation allowing transfers of governmental 457(b) plans while 457(e)(10) allows transfers between non-governmental 457(b) plans.  Also see 26 CFR 1.457-10(b)(5).  The inference is that these are the situations where the transfers are permitted and all other situations must be forbidden. 

[Belgarath]

I'd add that 457(e)(16)(A) dealing with rollovers refers specifically to entities described in subsection (e)(1)A), which is of course governmental plans. (e)(1)(B) is the tax-exempt organizations, which are not named under (e)(16)(A).

In case you want to see the actual citation-

(16) Rollover amounts

(A) General ruleIn the case of an eligible deferred compensation plan established and maintained by an employer described in subsection (e)(1)(A), if—

(i)

any portion of the balance to the credit of an employee in such plan is paid to such employee in an eligible rollover distribution (within the meaning of section 402(c)(4)),

(ii)

the employee transfers any portion of the property such employee receives in such distribution to an eligible retirement plan described in section 402(c)(8)(B), and

(iii)

in the case of a distribution of property other than money, the amount so transferred consists of the property distributed,

then such distribution (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid.

(B) Certain rules made applicable

The rules of paragraphs (2) through (7), (9), and (11) of section 402(c) and section 402(f) shall apply for purposes of subparagraph (A).

(C) Reporting

Rollovers under this paragraph shall be reported to the Secretary in the same manner as rollovers from qualified retirement plans (as defined in section 4974(c)).