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

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.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

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

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