Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Pixy, I thought it would be easy to direct the plan administrator to send the rest of a series of payments to an IRA without witholding any taxes. Today I recieved a letter from The Hartford (supposedly in the forefront of administering 457 plans) that states "sorry but payments from fixed annuities of any length are irrevocable. They did offer to send the net after tax payments to Vanguard. Would this be the same as contributing the net to an IRA? From your previous help on this issue it seems that I can send in the payments to an IRA myself. My tax guy is researching this but I would like to hear your ideas. Thanks Ralph.
Print the post Back To Top
No. of Recommendations: 0
Ralph writes:

Pixy, I thought it would be easy to direct the plan administrator to send the rest of a series of payments to an IRA without witholding any taxes. Today I recieved a letter from The Hartford (supposedly in the forefront of administering 457 plans) that states "sorry but payments from fixed annuities of any length are irrevocable. They did offer to send the net after tax payments to Vanguard. Would this be the same as contributing the net to an IRA? From your previous help on this issue it seems that I can send in the payments to an IRA myself. My tax guy is researching this but I would like to hear your ideas.

Hartford is correct. Annuity payments from retirement plans that last ten years or longer are ineligible for transfer to an IRA. If yours is a lifetime payment as you stated, then it is ineligible. Also, the transfer to Vanguard they have offered is merely a transfer to a regular account, not to an IRA.

Regards..Pixy
Print the post Back To Top
No. of Recommendations: 0
PIXY,I understand that lifetime (or any over 10 years) annuities are not eligible. My payment stream was for 7 years starting 5 years ago. I would like to stretch the remaining 2 years via a traditional IRA. I think what the Hartford is saying is that after choosing a fixed annuity for 7 years the money is no longer considered 457 payments. Am I out of luck? Thanks.
Print the post Back To Top
No. of Recommendations: 0
I think what the Hartford is saying is that after choosing a fixed annuity for 7 years the money is no longer considered 457 payments. Am I out of luck?

If that's what they are saying, then IMHO they are incorrect. Payments made for less than 10 years from a qualified plan are eligible for transfer to an IRA. While the 457 is not a qualified plan per se, the new law allows transfer of those proceeds to an IRA. Nothing in that law says that transfer must be made in a lump sum to be eligible. Therefore, I would ask Hartford to cite paragraph and verse why your annuity payments are not eligible whereas those made under similar circumstances from a 401(k) plan are.

Regards..Pixy
Print the post Back To Top
Advertisement