• Converting from a 457 to a Roth IRA provides more flexibility.Making a financial plan image by Allen Stoner from Fotolia.com
  
  There are many reasons you might want to convert your 457 to a Roth individual retirement account (IRA), one of which is that Roth IRAs give you more flexibility in directing your investments. Roth IRAs also hold the promise of tax-free distributions after retirement, provided you're willing to pay taxes on the converted funds.
  
  

Eligible and Ineligible

• There are 457 plans that can be rolled over and those that cannot, and they are classified as eligible and ineligible. If you have a 457b, your plan is eligible and you can roll it into a Roth IRA. If you have a 457f, your plan is ineligible; you cannot roll it into anything except another 457f.
  
  

No Income Limits for Rollovers

• A 2010 rule allows all taxpayers, regardless of their income, to roll qualified retirement accounts into Roth IRAs, according to the Fairmark website, which provides tax guidance. Previously, you could not roll over your 457 into a Roth IRA if you made over $100,000.
  
  

Income Taxes Due

• Your 457 contributions were "pre-tax," which means they came out of your check before you even saw them, and you did not count them as income when determining how much you owed the Internal Revenue Service (IRS). But Roth IRA contributions are "after-tax," which means you get no deduction for contributions. So when you convert your 457 funds to a Roth IRA, that tax break is lost. The amount of the conversion is counted as income the year you make the rollover.
  
  

Rollover Methods

• You may choose how to roll over your 457 account to a new institution. The most common method is a trustee-to-trustee transfer, in which you fill out paperwork to request an account transfer from one bank to another. You also can withdraw the money and deposit it in a Roth IRA within 60 days, which is called a 60-day rollover. The drawback to the 60-day rollover is that the money you withdraw is subject to 20 percent federal withholding.