Roth 457(b) to Roth IRA
It is my understanding that an individual cannot isolate tax free basis in a Roth 457(b). Is it possible for an individual to roll the Roth 457(b) to a Roth IRA and then remove the tax free basis from the Roth IRA?
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2013-11-01 16:55
I think you are referring to taking a Roth 457b distribution, which must include a pro rated amount of earnings along with the contributions. If the individual is eligible for a distribution from the plan (eg separated from service or age 59.5) then the Roth portion of the plan can be directly rolled to a Roth IRA. Once in the Roth IRA, the Roth IRA basis must be recalculated and the basis portion of the Roth 457b becomes Roth IRA basis and therefore added to any prior Roth IRA basis. A Roth IRA distribution can then be taken which is tax and penalty free if limited to Roth IRA basis. Note that any IRRs (conversions) within the Roth 457b must also be accounted for after the rollover to the Roth IRA.
Permalink Submitted by Peter Thomann on Fri, 2013-11-01 18:44
Thank you Alan.