Jump to content
Sign in to follow this  
flummoxed

Roth To Designated Roth Rollover

Recommended Posts

I am retired and have a 457b plan which has a designated Roth account.

 

I also have separate Roth accounts, in addition to a 401a account with post-tax contributions.

 

Does IRS allow:

 

1. Rollover of Roth accounts to the designated Roth account?

 

2. Rollover of post-tax 401a contributions to designated Roth account?

 

Thanks

Share this post


Link to post
Share on other sites
Guest Joel L Frank

I am retired and have a 457b plan which has a designated Roth account.

 

I also have separate Roth accounts, in addition to a 401a account with post-tax contributions.

 

Does IRS allow:

 

1. Rollover of Roth accounts to the designated Roth account?

 

2. Rollover of post-tax 401a contributions to designated Roth account?

 

Thanks

Roth 457(b) Plans are subject to RMD notwithstanding the fact that Qualified Distributions are received tax-free. Issue: These RMD must be spent or re-invested in an open or taxable account. You may want to roll your Roth 457(b) account to a Roth IRA where no withdrawals need to be made during your lifetime. A distribution of post-tax contributions from a 401(a) plan is eligible for rollover to a Roth IRA while the gains portion of the distribution is eligible for rollover to a Traditional IRA.

Share this post


Link to post
Share on other sites

I also have separate Roth accounts

Are you saying that you have a Roth IRA account? The IRS allows you roll your designated Roth 457(b) account into your Roth IRA. To have Roth in your 457(b) account, you must have worked for a governmental employer, a not-for-profit employer's 457(b) cannot roll over any amounts and cannot have Roth.

 

When you roll the amount to an IRA, it takes on the nature and rules a Roth IRA. That includes the rule about the 10% pre-age 59.5 excise tax (or age 55/termination, or age 50 public safety employee separation). So be careful about that. 457(b) distributions (not rolled over) after termination are exempt from that 10% excise tax, regardless of age.

 

If you established a Roth IRA before the rollover, the 5-year clock for the Roth IRA account now applies to the Roth rolled into that account.

 

If you do not have a Roth IRA already and you just now open one to roll over your Roth 457(b), the Roth IRA clock begins with the year you first put that Roth into it. That's right, the year that the 5-year clock started inside the 457(b) plan is not retained with your rolled over Roth account, that year is lost and is replaced with whatever "Roth start year" that the Roth IRA already has in place.

 

If the age 59.5 and the 5 year clock is not an issue, be sure to consider Joel's comments as well to avoid RMD by moving to an IRA (Roth IRA).

 

Hope this helps!

Share this post


Link to post
Share on other sites

Thanks for the advice Joel and John.

 

My designated Roth account offers an excellent fixed interest account option and my Roth IRA's only offer stocks and bonds.

 

If the stock market would again drop 50%, I believe that loss would be completely on me for both types of Roth, whereas the loss in my traditional IRA would be shared with Uncle Sam.

 

For example, if I had 100k in a traditional IRA with a 50% drop and cashed in I would pay taxes on 50k, whereas with a Roth account I would pay taxes on 100k.

 

Therefor I'd like to rollover my Roth IRA to designated Roth fixed rate account, balancing with the traditional IRA in stocks and bonds.

 

I'm 62 and retired, and my 457(b) account is governmental and includes both designated Roth and pre-tax.

 

Thanks again

Share this post


Link to post
Share on other sites
Guest Joel L Frank

What we all should have learned from the great recession is to ask the following question: when the stock/bond markets begin to fall, how long will I be willing to wait for a recovery before I sell my holdings?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

×
×
  • Create New...