ogilviesann Posted November 13, 2020 Posted November 13, 2020 I have a 457(b), non-governmental plan that we will answer basic questions for a 401(k) client. The document was drafted to begin distributions upon severance of employment or at age 70 1/2. They can choose a lump sum payment or 5, 10 or 15 year installments. One of the participants asked if he is still working at 70 1/2 and chooses to take a 10 year installment payout, if he retires 3 years in, can his payout be accelerated so that he can take the balance? The document isn't clear, but there doesn't appear anything that would stop the acceleration. His financial advisor who worked with them to set this up many years ago has no clue and is asking me. We don't specialize in 457 plans so I want to ask the experts in this group. Thanks for any insight you can provide.
Bob the Swimmer Posted November 17, 2020 Posted November 17, 2020 I would say no---otherwise if he has the ability to accelerate that should be taxable in year one.
Luke Bailey Posted November 18, 2020 Posted November 18, 2020 If the plan permits, you can change from the default method of distribution to something else, but only at the time you become eligible for distribution, not 3 years into the payments. Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034
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