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I recently wrote for some info on what to do regarding tax deferred money that is to be handed over to me from my old government job. I received paperwork today giving me many options for the plan. I was under the impression the funds could be rolled over into an IRA and not create any taxable event. Apparently, this was incorrect. They sent me a new W-2 to fill out. The pamphlet says all money distributed is treated as ordinary income in the year it is handed over. This is a 457 plan State of Florida deferred compensation plan.

Where can I find information on how I should accept this money to create the smallest taxable event? Can I put the money the money that I do get, minus the withholding, into an IRA to grow tax deferred until I am 70.5 (24 years from now)? In retrospect, was this a good plan to put money in, considering that I did not pay taxes on it for 4 years before I left the government? Thanks.

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