Advanced Underwriting Consultants

Question of the Day – October 12

Ask the Experts!

Here’s the question of the day.

Question:  I have a 47 year old doctor client who participated in a 457b plan sponsored by a nonprofit earlier this year.  He made $10,000 of deferral contributions.  He left that employer and is now working for a government hospital which also has a 457b plan.  Can he roll over the money from his old plan to the new one, and can he make a maximum contribution to the new plan this year?

Answer:  With regard to the rollover question, the answer is no.  Rollovers from a nonprofit-sponsored 457b plan are only allowed to other nonprofit-sponsored 457b plans—not government plans.

The amount of deferrals that can be contributed to the new 457b plan this year must take into account deferrals already made into the prior plan.  The limit is applied per individual, and not per plan.  In 2012, the deferral limit is $17,000 per year.

Thus, if the doctor has already made 457b plan deferral contributions of $10,000 into the prior plan, he may only make additional deferral contributions of $7,000 into the new plan.

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