Rollover of deferred compensation

[Steve Pope]

Is there any possibility to rollover normal distributions
from a (non-governmental) deferred compensation plan
into an IRA or other qualified plan?

In researching this, I see lots of references to doing
this rollover when the plan is held at a federal, state, or
municipal employer, but nothing on the case of private
employer plans.

I am not sure exactly what sort of deferred comp plan it
is -- perhaps 409(a). (Tangential question, Section 457
plans are limited to government employers, or is that
not the case?)

Thanks,

Steve

========================================= MODERATOR'S COMMENT:
It would help to know exactly what type of plan this is. Also what
is the nature of the distribution?

 

[Alan]

Is there any possibility to rollover normal distributions
from a (non-governmental) deferred compensation plan
into an IRA or other qualified plan?

No. You have a nonqualified plan. The only plans that can be
rolled over to an IRA are qualified plans (pension,
profit-sharing & stock bonus), annuity plans, 403(b) plans and
governmental 457 plans.

 

[Steve Pope]

Steve Pope wrote:

No. You have a nonqualified plan. The only plans that can be
rolled over to an IRA are qualified plans (pension,
profit-sharing & stock bonus), annuity plans, 403(b) plans and
governmental 457 plans.

Thanks, that is what I have assumed.

So ... is their any logic behind governmental employees
getting a break on this? (I realize tax laws are not
based on logic.)

Steve

 

[Alan]

Thanks, that is what I have assumed.

So ... is their any logic behind governmental employees
getting a break on this? (I realize tax laws are not
based on logic.)

Steve

It's not just state & local gov't. It also includes tax-exempts
other than churches.

Since the passage of EGTRRA 2001, governmental employees
certainly have more ability to shelter income from taxes and grow
savings tax-free. That act, dropped the combined contribution
limit of 457 plans with other defined contribution plans. Since
then, an eligible employer can offer a 401(k) or a 403(b) AND a
457 plan. The employee can contribute the maximum to both plans.
In 2009, that could be $33,000 plus another $11,000 in catchup
contributions if age 50. An employee with a private company in a
401(k) could only contribute half those amounts.

There are some other goodies buried inside some 457 plans for
governmental employees. I am almost sure that there is some
additional catchup provision when you get within 3 years of
retirement.

 

[HW \Skip\ Weldon]

There are some other goodies buried inside some 457 plans for
governmental employees. I am almost sure that there is some
additional catchup provision when you get within 3 years of
retirement.

Public 457s have a great catchup. Providing the participant
qualifies, he/she can contribution an additional $15500 until they
have "caught up". That goes to $16000 in 09.



-HW "Skip" Weldon
Columbia, SC