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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11854
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I had eto funds from my employer that i rolled into my 457b

Customer Question

I had eto funds from my employer that i rolled into my 457b account. Fico taxes were withheld. I thought those taxes were due at time of distribution.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi - I hold a JD (Juris Doctorate, a doctoral degree in the law), concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from Mercer University’s Stetson School of Business and Economics, as well as CFP® and CRPS designations. - I can help here

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Yes, as you can see from this IRS rollover chart, a rollover from 457(b) to IRA qualifies (with no notes or contingencies ... mean that no tax should have been withheld at all.

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https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

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Let me know if you have questions

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Lane

Customer: replied 1 year ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  Lane replied 1 year ago.

Ok, entered the call offer ... Once you accept, We can enter contact info

Customer: replied 1 year ago.
I do not think you completely understood my question. I had money owed me from eto (sick pay and vacation ) not used. Instead of taking this money I rolled it into my 457b account and some into my 403b account. Fico taxes were deducted frtom this money. Was this correct?
Expert:  Lane replied 1 year ago.

So sorry ... yes... This has to do with the fact that 457(b) plans are unfunded plans ... (Still owned by the employer at the time of deferral, contribution).

Expert:  Lane replied 1 year ago.

When you said ETO I thought you were talking about the Eaton Vance fund ETO ... I'm guessing that you were referring to PTO (Paid Time Off).

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But again, lkely the 403(b) was fine but the 457 plan is where you saw this ... has to do with the nature of a 457 plan.

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Section 3121(v) controls the timing of the payment of FICA taxes for purposes of section 457(b) plans.

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Section 3121(v)(2) provides, generally, that any amount deferred under a deferred compensation plan is be taken into account for purposes of these employment taxes as of the later of when the services are performed, or when there is no substantial risk of forfeiture of the rights to such amounts.

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Amounts deferred (both elective and nonelective) under these plans are generally subject to FICA taxes at the time of deferral (when the services are performed) because at that time the amounts are no longer subject to a substantial risk of forfeiture.

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Hope this helps to clarify

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Lane

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