457 Rollover to Roth IRA

- J
- jasontyip
  
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posted
15 years ago

Mon, Sep 15, 2008 5:50 PM

I have a 457 plan with my former employer (about $7,000) that I would like to rollover to my existing Vanguard Roth IRA. I am aware that there will be income taxes to pay. But I would rather do that now and also save in the fund cost department. I have talked to the company holding the 457 plan and they gave me a withdrawal form. It looks like they will be doing an electronic transfer to my checking account. I was under the impression that a rollover would go directly to Vanguard. Is there any disadvantages or having it go to me first and then just invest as I would normally? Thanks!

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- D
- Dave Dodson
  
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posted
15 years ago

Mon, Sep 15, 2008 7:02 PM

Why not call Vanguard and ask?

Dave

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- D
- Default User
  
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posted
15 years ago

Mon, Sep 15, 2008 7:17 PM

Normally you want to avoid having distributions sent directly to you, as they usually will withhold taxes and penalty. I believe that 457 plans don't have the 10% penalty for early withdrawal. However, the taxes will still be a problem. Are they planning on withholding taxes? If so, you'll have to make up the difference and then figure all that out at tax time.

It would cleaner and less confusing for all concerned if it was an f/b/o check from the plan, with no taxes withheld. Then you can just pay the taxes due with your return.

Brian

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.