457 to 457
I have a client who moved jobs and is allowed to roll over the current 457 into another eligible 457 plan. The custodian I am working with can set up a 457 plan (participant account), which they are saying would have the clients current 457 plan name and employer listed then FBO Mr. Client; client would then be trustee of the plan. It just seems odd to me that the custodian is telling me to put the current employer information in here when the current employer would have no idea. Does this make sense/ is this correct?
Permalink Submitted by Alan - IRA critic on Tue, 2013-09-24 18:22
My guess is that this is the method used for the new plan to track incoming rollover balances. Perhaps the new plan has different distribution options for the former balance than deferrals under the new plan. Had the former plan been a 401k plan for instance, that balance must be tracked because there would be a penalty for early distribution of that balance vrs no penalty for funds derived by 457 contributions. The old employer would not become involved in any future dealings with the plan balance that was rolled into the new plan.