Advanced Underwriting Consultants

Question of the Day – May 25

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 client is entitled to receive money from this Section 457 deferred compensation plan.  Is a distribution eligible for rollover to an IRA?

Answer: A Section 457 plan is a special kind of deferred compensation plan that can be offered to employees by nonprofit organizations or by government entities.  In most cases, such plans are governed by Revenue Code Section 457(b).

A special kind of deferred compensation plan—referred to as an ineligible plan­—may be offered to a select group of highly compensated employees at the nonprofit or governmental entity.  Such a plan is governed by Revenue Code Section 457(f).

Eligible distributions from governmental 457(b) plans can be rolled over to an IRA.  Distributions from a nonprofit Section 457(b) plan cannot, nor can distributions from any Section 457(f) plan.

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.