Question: Can a 457 plan be used in conjunction with Asset Care funding with qualified money?
Answer: There are two types of 457 arrangements. One is a governmental 457(b) which can be rolled over to an IRA. So, we would suggest that the governmental 457(b) be rolled over to an IRA, or merely take the distributions to pay the premiums (which may be preferable if the taxpayer is under age 59-1/2). Distributions are reported on Form 1099R.
The “other” 457(b) is for an employee of a non-profit employer. This can’t be rolled over and distributions are reported on Form W-2 from the employer. So, this would not necessarily be attractive to fund Asset-Care as these contracts are owned by the employer.
So, the question is which is it? And, what is the situation?
We can take distributions from 457b for retired public safety officers and the recipient can exclude $3,000 per year from their taxes to pay the annual COB rider premium.
If you have a question involving taxes, trusts, gifting, or other “weighty” matters, our Advanced Sales team can assist you. Please contact either Justin Fox or me and we can hook you up with the Advanced Sales attorneys.