457 plan was liquidated. Now what?

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Hello tax gurus

Unusual situation.  My former employer (non governmental not-for-profit) has liquidated their 457(b) plan.  All plan participants were notified that we were not eligible to roll over to an IRA, and our only option was to take the money as a cash distribution.

From what I'm reading on line, this is correct.  Because this isn't a government entity, it looks like there are no rollover options for this money.  Is there anything I'm missing?  Or am I stuck taking this as income for the year?  I believe there are no early withdrawal penalties with a 457 plan, luckily.

I want to decrease my income as much as possible this year, so my plan is to take this forced distribution $ and put it into my Solo 401k to get it off my MAGI.  I have other earned income that exceeds this amount, so I think this is acceptable?  As long as I don't exceed the total annual contribution limit for a Solo 401k?

Last question.  There's no time pressure to put this money into my Solo, is there?  Since this is a distribution/income and not a rollover, I have until tax time next year to do this, right?

Comments/wisdom much appreciated!
 

[terran]

How much you can put in the solo 401(k) depends on your self employment income only, so as long as that's the limit you're referring to that's fine.

If you have a 403(b) at work (which seems likely given that you had a 457) I'm pretty sure there's a slight difference compared to a 401(k) in that the overall limit is combined with other plans. You'll need to be careful that your contribution to a 403(b), your employer's contributions, any after tax 403(b) contributions and your solo 401(k) contributions stay under the $56k limit. If your employer plan is a 401(k) then only the first 3 are subject to the $56k limit and the solo 401(k) limit is separate.

As usual, you're subject to a single salary deferral limit across all 401(k) and 403(b) plans, so you can only contribute up to the $19k limit for both your solo 401(k) and your employer 403(b)/401(k) together.

Since you're not really (technically) putting THIS money in the solo 401(k), but rather your self employment income, you just need to contribute by your tax filing deadline of the year for which you're contributing.

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Thank you so much @terran.  Yes you're spot on;  I also have a 403b, and thanks for pointing that out -- I had not thought of that.

Thank god I didn't have more money in the 457 (only about $21k) . . . otherwise this liquidation could have really messed things up for this year.  As it is, I think I can cram everything I need to into the tax-advantaged space of the Solo and my HSA.   

Cheers!

[Krnten]

Maybe I’m missing something, but I’ve always cashed out old plans and then put the money into an ira or new 403b without issue.  I’ve never successfully pulled off a rollover that didn’t involve putting the money temporarily in my checking account because I never got the two firms to talk to each other the right way (I probably wasn’t persistent enough).  In any case, as long as you get the retirement money into another retirement account within 30 days (or 60, I forget), there are no tax implications.

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Maybe I’m missing something, but I’ve always cashed out old plans and then put the money into an ira or new 403b without issue.  I’ve never successfully pulled off a rollover that didn’t involve putting the money temporarily in my checking account because I never got the two firms to talk to each other the right way (I probably wasn’t persistent enough).  In any case, as long as you get the retirement money into another retirement account within 30 days (or 60, I forget), there are no tax implications.

Yeah, there are special rules around 457 plans that differ from 401ks and 403(b)s.  If it's a government 457, you can roll it over to an IRA -- but for nongovernment plans, your only options are to either let it stay where it is or take it as income.  In my case I can't let it sit because the plan was liquidated.  :(

On the upside, if you have access to both a 457 and a 403b, you can contribute to BOTH up to the annual individual contribution max (doubling it) which is sweet.  Also, there are no early withdrawal penalties. 

This has been a really educational experience!