distribution from Roth 457 plan

meinfeldt · ‎February 14, 2019

A friend quit her job and cashed out her Roth 457 plan. She is 52 years old. Her 1099-R shows the following amounts:

Line 1 $1285 Gross Distribution

Line 2a $1285 Taxable Amount

Line 4 $ 10 Fed tax w/h

Line 5 $1238 Employee Roth Contributions

Line 7 Code 2

Does it appear that this is the proper way to account for this type of distribution?

I believe the taxable amount should be $1285 - $1238 or $47. How is it entered into the tax software?

Any help would be appreciated...

NCperson · ‎February 15, 2019

Assuming this is a 'designated Roth Account'. the form is correct

withdrawals from designated Roth 457 plans are fully taxable is you are under 59.5 years old, but there is no 10% penalty for early withdrawal

please see this IRS chart at this link. note that it states that

https://www.irs.gov/retirement-plans/roth-comparison-chart

Withdrawals of contributions and earnings are not taxed provided it’s a qualified distribution – the account is held for at least 5 years and made:

On account of disability,
On or after death, or
On or after attainment of age 59½.

but since your friend is under 59.5 and doesn't meet the criteria, contributions and earnings ARE taxable and therefore line 1 and 2a are correctly the same.

best to reconfirm the type of Roth with the issuer of the form