New Roth Conversion Rules
I have a client that is not yet retired, but the plan allows for in-service withdrawals. Can the client do a trustee to trustee transfer to a Roth IRA? Also, to my knowledge, no one at my company has performed a plan to Roth conversion yet. Do I need to check with my company to make sure they will allow the conversion?[/b]
Permalink Submitted by Alan Spross on Fri, 2008-03-28 02:48
It make take awhile for plans to digest the IRS Regs on the direct Roth rollover from QRPs. So far, the IRS has not answered all the questions and has released only one Notice ( 2008-30) touching on this subject. I think in due time most plans will allow the direct rollover to a Roth. Keep in mind that all in service distributions of any type are subject to the plan guidelines, and that most plans only allow them after reaching a certain age, usually 59.5.
A plan must offer direct trustee transfer for eligible distributions, however they do not have to offer more than one destination for the transfer. This is another potential for employees that want part of their assets moved to a TIRA and the rest to a Roth IRA. Under Sec 824 of the PPA, the Roth transfer can also be done by rollover, so in some cases the taxpayer may have to handle the Roth part on a non direct basis.