(NB: an insignificant amount of money is in play here; I just want to avoid getting our return flagged by some automated IRS cross-check.)
Years ago, my wife worked briefly for the state, and, accrued a small pension account. In January of last year, they closed her (inactive) account, and did a forced distribution. Thinking the 10% early distribution penalty would apply(?), we wanted to roll that over into her Roth account. But, because the amount was too small, the state wouldn't do a 'direct' (trustee-trustee) rollover. So, we contributed that same amount to the Roth ourselves, thinking we'd report it as a rollover on 8606. However, the 8606 appears limited to "Traditional, SEP, and SIMPLE" IRAs as the source, not 457(b)'s.
Further searching has been confssing:
- This IRS chart says 457(b) -> Roth is permitted:
- This article says indirect 457(b) -> Roth was made permissible on
1/1/15,
- The 5329 instructions (p2) seem to say that 457(b) distributions are not subject to the 10% early withdrawal penalty -
questions:
- Are 457(b) distros exempt from the 10% penalty? (If so, we could just recharacterize the Roth 'rollover' contribution, and be done with this.)
- If indirect rollovers from a 457(b) to a Roth are permitted, should it be reported on the 8606?
Additional info:
- The 1099-R shows the full distro as taxable. No tax was withheld. Box 7 shows code 8.
- The 5498 for the Roth account shows the contribution as a rollover (box 2)