457 Plan Rollover to Roth IRA

[S T]

Question - Can a retired taxpayer rollover their 457 Plan to a Roth IRA? Or, does it need to be rolled over to a Traditional IRA first, then to a Roth IRA.I cannot seem to find a definitive answer and it might depend on the 457 Plan - If plan allows and it is a 457B plan information I have researched would seem to say "yes" it can be rolled over to a Roth IRA.

Obviously a taxable event.

Thanks

Sandy

[Roland Slugg]

Can a retired taxpayer rollover their 457 Plan to a Roth IRA?

Yes. This has been allowed since 2008. (Code §408(A)(e)(1)(B)(ii))

Obviously a taxable event.

Most definitely! Such a rollover, however, is not subject to the 10% penalty.

The above answers YOUR question, Sandy ... now, how about answering MINE?

Why are so many of your clients actually considering such an irrational move? Have they really thought it through? Have you? Okay, sure, if they can absorb the income and pay little or no taxes on it, fine. If not, what's the attraction? Is the lure of tax-free growth so compelling that they completely ignore the up-front federal and state tax hits? What do they expect to make in their Roth IRA with the after-tax funds they park there? 1% ... 2% ... 3% if they're lucky? Have they been talking to another "financial planner" who's recommending this because it is good ... for him?

[S T]

Yes, Roland - A financial planner trying to convert 457 Plan and Traditional IRA to annuities - recommending ROTH - This "planner" has already mis-calculated the Tax Bracket, but trying to sell the approach that at 70.5 the tax client will not have to deal with RMD

This is a continuation of a prior post - Total of the 457 and IRA are approx 90K

At least the Tax Client asked for my opinion - so trying to project at age 70.5 - Tax Client now at age 66 retired with a Calif State Pension.

Sandy