Advanced Underwriting Consultants

Question of the Day – July 20

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: I have a client who participates in a governmental deferred compensation plan under Code Section 457(b).  The client is 72 and still working, and wants to roll over an IRA to the 457 plan.  Will he be able to avoid RMDs from the plan until he retires?

Answer: With regard to the Section 457(b) plan balance itself, the client can defer RMDs until April 1 of the year following retirement.

With regard to the rollover amount, the answer does not appear to be clear.  Tax rules require the 457 plan administrator to segregate rollover amounts and earnings from “regular” 457 plan balances.  For the purpose of certain rules, those rollover balances retain some of their old features.  For other situations, the Section 457 rules apply to rollover balances.

The Code and regulations appear to be silent as to whether RMDs are required from the rollover balance.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.