How do I recover taxes that were taken from my retirement account?

by Lisa M. Minniti-Soska, CPA | Jun 29, 2018

I am 60 years old and retired from a nonprofit medical system in Wisconsin. I now reside in Nevada. I have both 403(b) and 457(b) retirement accounts sponsored by my employer through Transamerica. I was surprised when I recently received from Transamerica a total distribution of the 457(b) account, in the amount of about $87,000, with about $19,000 taken by them for taxes. I have found that within 60 days I can rollover this amount into an IRA through my credit union, but how do I recover the taxes that were taken by Transamerica? 

There are two types of 457(b) plans: tax-exempt 457(b) plans and governmental 457(b) plans. You mentioned you retired from a nonprofit organization, which is considered a nongovernmental sponsor plan under the rules of Internal Code Section 457. While rollovers to other eligible retirement plans are allowed for governmental 457(b) plans, generally rollovers from a tax-exempt 457(b) are not allowed, unless it is rolled into another tax-exempt 457(b) plan. Unfortunately, you cannot roll the funds into your IRA.

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Answered by: Lisa M. Minniti-Soska, CPA, is a partner in the real estate group of Mazars USA LLP in Fort Washington, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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