New York Government 457b Plan to Roth IRA
Hello, I have money in a 457b IRA plan and have retired at age 49, I have the appropriate number of years for my service retirement but am afraid because of my age I will not be eligible for the NYS 20k yearly deduction if I receive money from my 457. In addition, if I roll my 457 into a Roth IRA do I have to pay NYS taxes at the time of the rollover? Thanks!
Permalink Submitted by Alan - IRA critic on Tue, 2016-04-05 22:51
You would have to pay NYS taxes for the year of any distributions including Roth rollovers prior to 59.5. The tax is due 4/15 but in order to avoid any underpayment penalties, the income would have to be included in figuring quarterly estimated taxes. Generally, it is better not to have tax withheld from a Roth rollover as it would reduce the amount rolled over. Note that if you roll this over to a Roth IRA and take Roth distributions before 5 years has elapsed you will owe a 10% penalty on the amount distributed. So if you will need any of this money for expenses in the next 5 years you might be better off to leave that amount in the 457 since you can withdraw it without any penalty.