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Oakland County adds in-plan Roth conversion feature to 457(b) deferred-compensation plan
Summary
County retirement plan administrator presented a new in-plan Roth conversion feature allowing participants to convert non-Roth dollars inside the 457(b) plan once per year; committee recommended forwarding the amendment to the board.
Oakland County’s deferred compensation plan administrator and plan vendor Empower presented an amendment to the county’s 457(b) plan to permit in-plan Roth conversions, allowing participants to convert non‑Roth dollars within their 457(b) accounts to Roth status once per year.
The vendor explained that conversions would be a taxable event for the converted amount (taxed one time at conversion), after which earnings on those converted dollars would be tax‑free if withdrawn in a qualified distribution. Staff said the change could help retain assets in the county plan by providing an in-plan conversion option instead of prompting participants to roll funds into an IRA to execute a Roth conversion.
The feature requires a one-time paperwork process and counsel recommended participants consult tax advisers; the committee was told Empower will provide participant materials and one-on-one support. Committee members asked whether the conversion counts against Roth-IRA contribution limits and the vendor responded that conversions inside the 457(b) do not affect Roth-IRA contribution limits.
Committee members moved to recommend the 457(b) plan amendment to the full board; the presenter said the new feature would be available once administrative steps and materials are finalized.
