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      11-26-2012, 02:04 PM   #7
New Member

Drives: S4, 335i shopping
Join Date: Oct 2012
Location: 410

iTrader: (0)

Lets clear things up.
There's no reason to convert any of it to a Roth. Your initial thinking was right about converting and then taking the exemption. 2 issues: First, you wouldn't be able to get that exemption if you've owned(let alone purchased) another property within the year. Second, issue #1 is really a non-issue anyway. The whole point of converting and then taking the exemption would be to avoid the early withdrawal penalty. However, a 457 is a bit different than a 401k/403b in that there is no early penalty for withdrawals before 59 1/2. So if you really wanted the money, just taking it straight from the 457 would be fine... but you'll still be taxed on it of course.

With that aside, it's not really the best idea as others have already said.