ROTH 457b
educator is looking at reasons to or not to use the ROTH version of the 457 option. Under the ROTH are they allowed pre 59 1/2 distributions if for educational reasons like in a ROTH IRA?
educator is looking at reasons to or not to use the ROTH version of the 457 option. Under the ROTH are they allowed pre 59 1/2 distributions if for educational reasons like in a ROTH IRA?
Permalink Submitted by Alan - IRA critic on Thu, 2015-04-30 02:54
A 457b is not a qualified plan, so the 10% penalty does not apply to any distributions from a 457b, whether from the pre tax 457b or from a Roth 457b.
Permalink Submitted by Toby Hartley on Thu, 2015-04-30 18:08
OK, but what about the fact that if she takes funds they are pro-rata and if under 59 1/2??
Permalink Submitted by Alan - IRA critic on Thu, 2015-04-30 18:17
I think are are referring to Roth 457 distributions being pro rated between contributions and earnings. That would still apply and the earnings portion would be taxable, but there would be no 10% penalty on the earnings for the reason stated earlier. The higher education exception does not apply to a 457b distributions because the exception only waives the penalty and there is no penalty from these plans that needs a waiver.