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eyes123

457b Penaltys

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My wife works for a non profit hospital and is enrolled in both 403b and a 457b plans. She was told that if she would stop working at the hospital that the 403b could be rolled over but the 457b plan could not. On top of that, they said that the 457 plan would incur a 10% penalty. I read on the message board here that there was no penalty with a 457 plan? Would she also have to pay regular income tax on the 457 money since it is not being rolled over into an IRA?

 

Thanks,

 

Jeff

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Guest Sierra

My wife works for a non profit hospital and is enrolled in both 403b and a 457b plans. She was told that if she would stop working at the hospital that the 403b could be rolled over but the 457b plan could not. On top of that, they said that the 457 plan would incur a 10% penalty. I read on the message board here that there was no penalty with a 457 plan? Would she also have to pay regular income tax on the 457 money since it is not being rolled over into an IRA?

 

Thanks,

 

Jeff

 

eyes: The information your wife received is wrong. The 457(b) plan is eligible for rollover AND is exempt from the 10 percent penalty tax.

 

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My wife works for a non profit hospital and is enrolled in both 403b and a 457b plans. She was told that if she would stop working at the hospital that the 403b could be rolled over but the 457b plan could not. On top of that, they said that the 457 plan would incur a 10% penalty. I read on the message board here that there was no penalty with a 457 plan? Would she also have to pay regular income tax on the 457 money since it is not being rolled over into an IRA?

 

Thanks,

 

Jeff

 

eyes: The information your wife received is wrong. The 457(b) plan is eligible for rollover AND is exempt from the 10 percent penalty tax.

 

Joel,

 

Can a 457 be rolled over into a 403b without any tax or penalty? If so, is the procedure for doing so the same as with transferring one 403b to another 403b, i.e., simply filling out a transfer form from the company to which the funds are going?

 

This would be really helpful to my wife and me if it could be done.

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Thanks for the reply. Where might I find a downloadable or printable copy of the info on the 457(b) penaltys and/or lack of penaltys?

 

Jeff

Edited by eyes123

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Guest Sierra

Joel,

 

Can a 457 be rolled over into a 403b without any tax or penalty? If so, is the procedure for doing so the same as with transferring one 403b to another 403b, i.e., simply filling out a transfer form from the company to which the funds are going?

 

This would be really helpful to my wife and me if it could be done.

 

============================================================

ap: Upon separation from service an employee may rollover a 457(b) to a 403(b). This is a rollover transaction as opposed to a Revenue Ruling 90-24 Capital Transfer available only to section 403(b) issuers. Please keep in mind that if the 457(b) holder is not yet 59-1/2 and effectuates this rollover he/she must be able to identify the 457(b) funds from the 403(b) funds in order to be exempt from the 10 percent federal excise tax in the event of withdrawing 457(b) funds prior to age 59-1/2.

 

Peace and Hope,

Joel L. Frank

Edited by Sierra

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"Upon separation from service an employee may rollover a 457(b) to a 403(b). This is a rollover transaction as opposed to a Revenue Ruling 90-24 Capital Transfer available only to section 403(b) issuers. Please keep in mind that if the 457(b) holder is not yet 59-1/2 and effectuates this rollover he/she must be able to identify the 457(b) funds from the 403(b) funds in order to be exempt from the 10 percent federal excise tax in the event of withdrawing 457(b) funds prior to age 59-1/2."

 

Joel,

 

My wife is 46, is not leaving her employer, and has no plans of withdrawing 457 funds (that hopefully will be transferred to her 403b account) prior to age 59-1/2. Does this mean that she will not be subject to a penalty and/or tax if she moves the 457 funds to her 403b account? Sorry, but this is a bit confusing. Thanks very much for your help, and for being such a stalwart on 403b/457 issues.

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Guest Sierra

"Upon separation from service an employee may rollover a 457(b) to a 403(b). This is a rollover transaction as opposed to a Revenue Ruling 90-24 Capital Transfer available only to section 403(b) issuers. Please keep in mind that if the 457(b) holder is not yet 59-1/2 and effectuates this rollover he/she must be able to identify the 457(b) funds from the 403(b) funds in order to be exempt from the 10 percent federal excise tax in the event of withdrawing 457(b) funds prior to age 59-1/2."

 

Joel,

 

My wife is 46, is not leaving her employer, and has no plans of withdrawing 457 funds (that hopefully will be transferred to her 403b account) prior to age 59-1/2. Does this mean that she will not be subject to a penalty and/or tax if she moves the 457 funds to her 403b account? Sorry, but this is a bit confusing. Thanks very much for your help, and for being such a stalwart on 403b/457 issues.

 

 

The rollover from the 457 to the 403b will be tax free and all distributions from the 403b will be exempt from the penalty tax provided they are made after reaching age 59-1/2.

 

Peace and hope,

Joel

 

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