Ask the Experts!
The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.
Question: My 56 year old client had previously rolled over his IRA into his governmental Section 457(b) deferred compensation plan. Will he be able to access the money prior to age 59 ½, and will the amounts be subject to a 10% penalty tax?
Answer: Rollover amounts to a 457(b) plan are available to the participant prior to age 59 ½. In-service distribution rules for 457 accounts do not apply to amounts rolled over to such accounts.
Normal distributions from a Section 457(b) account are not subject to the 10% early distribution penalty. However, Revenue Code Section 72(t) specifically says that amounts rolled into 457 plans are still subject to the premature distribution penalty.
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