Service (work) Credits

[dsi]

This area of taxation is my weakness. My client wants to purchase 4 years of service (work) credits. To do so, he needs to rollover his entire 457 plan investment dollars, and cash in his Roth IRA. Are there any tax consequences to doing this?

[dsi]

Example of what I'm referring to:

By spending thousands of dollars now, one can purchase a number of years of additional service credits towards retirement. e.g., If you are 55 and can retire now, by purchasing an additional 5 years of service credits, it's like you are retiring at 60...with all of the benefits of retiring at 60.

[dsi]

Update:

This has been a challenging project, but it appears that the 457 funds can be rolled over tax free. This ROTH distribution may have some tax consequences...still researching this.

[dsi]

Correction: the 457 must be a "trustee to trustee" transfer NOT a rollover.

[Burke]

Example of what I'm referring to:

By spending thousands of dollars now, one can purchase a number of years of additional service credits towards retirement. e.g., If you are 55 and can retire now, by purchasing an additional 5 years of service credits, it's like you are retiring at 60...with all of the benefits of retiring at 60.

I am assuming you are referring to a particular company's retirement plan and policies, and not to any kind of tax or social security rules.

[dsi]

My client is a County employee, in CA.