457 plan, Roth conversion AND RMDs

Submitted by Amanda Minter on Thu, 2022-06-23 22:34

Retired individual turns 72 this year and has money in a 457b plan. 457 account balance is divided equally between pre-tax and Roth dollars.
They are considering Roth conversion, and was told by someone at the deferred comp program that the total (Roth & pre-tax) is subject to RMD, but they could roll the Roth portion into a Roth IRA to avoid it becoming part of the RMD.
Seeking clarification on his options please…must he take the RMD first before doing a Roth conversion, and was he given the correct information regarding his RMD being from both the Roth & pre-tax and if so can he roll the Roth portion into a Roth IRA and have it avoid being included?



Submitted by Alan - IRA critic on Thu, 2022-06-23 23:32

  • He could have avoided the Roth 457b RMD had he rolled it to a Roth IRA before this year. But since this year is an RMD distribution year, he must take the RMD before rolling any additional amounts to an IRA. If the Roth 457 is rolled over after the RMD this year, RMDs will be avoided in future years, but not this year.
  • The tax code allows non IRA plans to aggregate the RMD between the pre tax and Roth accounts in any combination, but the plan may not allow it. 
  • When  completing the RMD and then doing a direct rollover to IRAs, the pre tax account can be rolled either to a TIRA (non taxable) or to a Roth IRA (taxable). The Roth 457b can only be rolled to a Roth IRA.
  • More complexity – since this is the first RMD year, the 457b RMDs are not due until 4/1/2023, but if any rollovers are to be done this year, the 2022 RMD must be completed first.
  • All this assumes a govt 457b, since only govt 457b plans are eligible for rollover.


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