NQDC 457(b)

Submitted by Richard Iannuzzi on Thu, 2016-03-10 16:11

I recently retired and chose to close out my non-governmental NQDC 457(b) plan. After doing so, a financial advisor indicated I had 30 days to roll it over into an IRA because the rules have changed to allow this. Now, as I prepare my taxes I’m getting conflicting advise as to whether or not I was permitted to roll over from a NQDC 457(b) to an IRA. FYI I am 68 years of age and my spouse is 69, if that matters. Have rules changed to allow this roll over?



Submitted by Alan - IRA critic on Thu, 2016-03-10 17:40

  • Rules have not been changed. Only a govt 457b can be rolled over to an IRA. Here is the latest IRS rollover chart:
  • https://www.irs.gov/pub/irs-tege/rollover_chart.pdf
  • The amount of the rollover is treated as an excess IRA contribution, so you will need to explain this to the IRA custodian and request that they return the rollover to you with any allocated earnings. The earnings will be taxable in the year you did the rollover. You also need to report the 457b distribution as taxable income on line 16. Any earnings returned from the IRA corrective distribution will be taxable on line 15. You may have a loss on the corrective distribution and no taxable earnings, so this error may not cost you anything other than the tax bill for distributing a large amount in a single year from the 457 (if you had a choice).

Add new comment

Log in or register to post comments