How to Convert a 457 Oregon Deferred Comp to a Self Directed IRA
The Oregon 457 Deferred Compensation Plan, also known as the Oregon Savings Growth Plan (OSGP), provides public employees with a way to save up to $16,500 annually for retirement on a pre-tax basis. The OSGP is similar in function and operation to the 401k retirement plan that many companies offer their employees. Unlike a 457 plan, a self-directed Individual Retirement Account (IRA) is a retirement account that you establish as an individual, rather than through an employer. IRAs commonly have more restrictive contribution limits than 457 plans but offer much broader investment options. The IRS permits roll overs from the Oregon 457 plan into an IRA.
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Instructions
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Open a self-directed IRA. While most financial services firms, such as banks and brokerage houses, can open an IRA for you, a self-directed IRA involves more paperwork and IRS reporting so not all firms will open one for you. If you can find a firm that will serve as your self-directed IRA custodian, you will have to provide personal information such as your date of birth, years of investment experience and social security number to open the account.
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Contact your Oregon 457 plan administrator. Inform him that you wish to roll over your 457 plan assets into a self-directed IRA. Ask for the relevant transfer paperwork.
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Complete the necessary paperwork. Specify that you wish to roll over your 457 funds, not take a distribution. You can roll over retirement plan funds on a tax-free basis, but if you take a distribution, you will have to pay ordinary income tax on the entire amount of your distribution.
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Sell funds, if necessary. In the OSGP, your investments are limited to a series of mutual funds that are specific to the plan. You must liquidate these funds and transfer over cash if you are moving to a self-directed IRA.
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Monitor the transfer. Verify that all of your funds have moved to your IRA. You may receive final dividends or interest payments in your 457 after your initial transfer, so confirm that there are no residual assets remaining in the plan.
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Stop your contributions. If you are still employed by the sponsor of your 457 plan, verify that you are no longer making contributions to the plan.
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Invest the money in your IRA. As the funds you transfer from your Oregon 457 plan will come over as cash, you must reinvest the money if you want to maintain your investment strategy.
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