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Author: brvo Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: 457 plan Date: 6/29/1998 7:54 PM
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Hello again everyone,
Can someone explain to me what options I have available
on where to put my 457 plan money upon retirement.
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Author: Tiggertoo One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4077 of 75383
Subject: Re: 457 plan Date: 6/30/1998 11:28 PM
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>>>Hello again everyone,
Can someone explain to me what options I have available
on where to put my 457 plan money upon retirement.<<<

The only options you have on a 457 plan deal with how and when you want your money paid to you, and you can get the choices from your plan trustee.

The 457 plan is not a federally qualified plan; therefore, you do not have the rollover capabilities for IRAs and 401Ks and Etc.

When the money was withheld from your pay, your taxable income was reduced and held by your company. It is an asset as well as a liability on your company's books. When you chose to have the money paid to you, it will be reported on a W-2 statement and you will need to include it as income for tax purposes.

If you qualify, you can set up an IRA or Roth for the max amount allowed, but that is all. You will then pay taxes that you avoided when the money was withheld from your pay plus what you earned while in the 457 account.

While your options are not great, it was a great way to earn tax deferred income as well as to reduce current taxable income. But as with all things good, the end must come, and with it the taxes.

Hope this has helped.

LOL

TTFN...TiggerToo

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Author: vargaj Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4107 of 75383
Subject: Re: 457 plan Date: 7/1/1998 4:44 PM
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My wife has a 457 plan at here work (U of Utah), so this affects us too. May I assume that when she leaves the U of U she can defer receipt of her 457 funds until such time as she needs (or wants) it, and does not have to take the income on termination. The other question is that if we move back to CA and then she takes her 457 funds, would she then have Utah income as well as CA income and would we be dealing with a 2 state income tax return for that(those) year(s) ?

Joe Varga

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4112 of 75383
Subject: Re: 457 plan Date: 7/1/1998 5:43 PM
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Joe,

<<My wife has a 457 plan at here work (U of Utah), so this affects us too. May I assume that when she leaves the U of U she can defer receipt of her 457 funds until such time as she needs (or wants) it, and does not have to take the income on termination. The other question is that if we move back to CA and then she takes her 457 funds, would she then have Utah income as well as CA income and would we be dealing with a 2 state income tax return for that(those) year(s) ?>>

Her distribution options will depend on the plan documents. Most will allow her to take it in installments over two to fifteen years. At best, she will probably be able to defer those distributions until January 1 of the following year. As to dual state taxation, there's a law against that for retirement plansso she should only be taxed in the current state of residence on receipt.

Regards....Pixy

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Author: vargaj Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4132 of 75383
Subject: Re: 457 plan Date: 7/2/1998 11:49 AM
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I am aware of the law that prevents states from taxing retirement income from out of state, but a previous post indicated that 457 income is reported on a W-2, and is not a qualified plan in the same sense that IRA's and 401k's are. How would anybody know that this is retirement income and that the no tax on out of state retiement income law aopplies. If it's reported on a W-2, its taxed as wages and reported as income from UT isn't it?

Joe Varga

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4136 of 75383
Subject: Re: 457 plan Date: 7/2/1998 1:53 PM
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Joe,

<<I am aware of the law that prevents states from taxing retirement income from out of state, but a previous post indicated that 457 income is reported on a W-2, and is not a qualified plan in the same sense that IRA's and 401k's are. How would anybody know that this is retirement income and that the no tax on out of state retiement income law aopplies. If it's reported on a W-2, its taxed as wages and reported as income from UT isn't it?>>

Yes, it would be reported as income. I'm not a tax expert, and that pertains particularly to the laws of UT and CA. If you are no longer a resident of UT but UT requires you to file there because the income was earned within the confines of that state, I would assume you would file a non-resident return and pay whatever taxes are due. I would further assume that when you file as a resident of CA, you would receive some sort of credit for the taxes paid to UT. That's how most states handle it, and it is intended to avoid double taxation on the same income.

You will need to see your tax advisor to see how it plays out in your case.

Regards.....Pixy

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Author: Tiggertoo One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4139 of 75383
Subject: Re: 457 plan Date: 7/2/1998 9:26 PM
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>>>I am aware of the law that prevents states from taxing retirement income
from out of state, but a previous post indicated that 457 income is
reported on a W-2, and is not a qualified plan in the same sense that
IRA's and 401k's are. How would anybody know that this is retirement
income and that the no tax on out of state retiement income law
aopplies. If it's reported on a W-2, its taxed as wages and reported as
income from UT isn't it?<<<

Hi Joe:

I think the key wording here is retirement plan. The 457 plan is nothing more than a deferral of income from one year to another, and terchnically is not a retirement plan per se.

The way it works is the money is taken from your wages (after FICA) and invested by your company. Your W-2 shows a reduced amount also. I think the reason it does not qualify as a "Federally Qualified Plan" is due to the lack of discrimination rules and the fact that you become a creditor of your company, and if the company goes broke and you lose your money, the PBGC will not bail you out as in a qualified plan.

Hope this helps.

LOL

TTFN...TiggerToo

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