457(b) death taxation

[Draper55]

Tax-exempt org CEO died in svc;two children as beneficiaries.. I believe no required federal withholding  on the beneficiary distributions and no rollovers allowed  but could be transferred to another tax-exempt 457(b) plan of beneficiary(if it exists)  without any tax. Don't do alot in this area so just double checking..attorney provided client with general qualified plan distribution paperwork which I think is no good. Any confirmation appreciated. Plan was funded at a mutual fund company..

[Carol V. Calhoun]

You are correct on both counts.  From Notice 2003-20:

Quote

Distributions to a beneficiary of a deceased participant under a ' 457(b) plan are reported on Form 1099-R, Distributions from Pensions, Annuities, Retirement or ProfitSharing Plans, IRAs, Insurance Contracts, etc. See Rev. Rul. 86-109, 1986-2 C.B. 196. No income tax withholding is required for distributions from ' 457(b) plans to beneficiaries. See Rev. Rul. 59-64, 1959-1 C.B. 31.

Treas. Reg § 1.457-10(b)(5) provides that a beneficiary may transfer the money to a 457(b) plan of a nongovernmental employer if both the transferring plan and the receiving plan allow for this.  Of course, this would require that the beneficiary actually work for a nongovernmental tax-exempt which maintains a 457(b) plan that allows for such transfers.

[Draper55]

Thanks for your response Carol..very much appreciated...