457 Spousal account
My client who is 54 lost her husband a few years ago and inherited his 457 deferred comp account. The 457 sponsor re registered the account as a spousal rollover 457 account. I know that the IRS allows for rolling over a 457 account to an IRA but I am not clear if we can rollover a spousal 457 account to a spousal IRA account to preserve her ability to make withdrawals without incurring the 10% IRA penalty for early withdrawals?
Permalink Submitted by Alan - IRA critic on Tue, 2019-01-29 23:28
Client can withdraw directly from the inherited 457 without penalty, but if rolled over to her own IRA she would be subject to the 10% penalty until she reached 59.5. Another option is to do a direct rollover to an inherited IRA from which distributions would be penalty free.