Question: I’m almost 50 years old. Should I roll over my Roth 457 to a Roth IRA right after I retire or right before I turn 70? Does it matter? And after I turn 50, when can I make my catch-up contribution? Does my eligibility begin right after my 50th birthday, or on Jan. 1 of the following year?
Ric: From a tax perspective, it doesn’t matter when you execute your rollover from the 457 plan to the IRA. There is no required minimum distribution from Roth plans.
But it might matter from an investment perspective. For instance, you might not be happy with the limited investment choices in your 457 plan. They might not offer sufficient diversification or effective rates of return compared to alternative investments — or the fees or risks might be higher than those offered by other investments. So you might want to roll over the IRA sooner rather than later to correct those problems.
But if you are happy with the investments in your current plan, there’s no particular urgency to making a switch (although you could switch to an IRA and still keep those investments).
Some 457 plans allow you to make the rollover while you’re still working, so look into the details of your particular plan.
Your eligibility for the catch-up contribution begins immediately after your actual birthdate — not the following year. So if you turn 50 on March 1, you’re eligible the very next day.