Distribution Originating from a Designated Roth 401(k) Account |
| |
Direct Rollover
to
Roth 401(k) |
Direct Rollover
to
Roth IRA |
Participant Rollover
to Roth 401(k)
(Within 60 days) |
Participant Rollover
to
Roth IRA
(within 60 days) |
Ability to Move Designated Roth Contribution |
Y
1.402A-1 Q&A 5a |
Y
1.408A-10 Q&A 1 |
N
1.402A-1 Q&A 5a |
Y
1.402A-1 Q&A 5a |
Ability to Move Earnings on Designated Roth Contribution |
Y
1.402A-1 Q&A 5a |
Y
1.408A-10 Q&A 1 |
Y
1.402A-1 Q&A 5a |
Y*
1.402A-1 Q&A 5a & d |
The Five-Taxable-Year Period Determination |
The five-taxable-year period starts on the earlier of:
the first Roth contributions made to the distributing plan, or
the first year of the five-year-period for the Roth contributions made in the receiving plan, if earlier.
1.402-A Q&A 4b |
Nonqualified Distributions are determined based on the first contribution made to the Roth IRA.
1.408A-10 Q&A 4
Qualified distributions are treated as "basis" in the Roth IRA (and the ordering rules of Roth IRA apply - if earnings accrued after being in the Roth IRA are not qualified). |
The five-taxable-year period starts on the first year of the five-year period for the Roth contributions made in the receiving plan.
Note: the five-year-taxable period from the distributing plan is not carried over to the recipient plan.
1.402A-1 Q&A 5c |
Nonqualified Distributions (earnings) only are determined based on the first contribution made to the Roth IRA. 1.402A-1 Q & A 5b
1.408A-10 Q&A 4
Qualified distributions are treated as "basis" in the Roth IRA (and then ordering rules of Roth IRA apply - if earnings accrued after being in the Roth IRA are not qualified). |
Recipient Plan Tracking |
The five-taxable-year period starts on the earlier of:
The first Roth contributions made to the distributing plan, or
The first year of the five-year-period for the Roth contributions made in the receiving plan, if earlier.
1.402A-1 Q&A 4b |
Five-taxable-year period tracking begins with the start of the Roth IRA. So if a new Roth IRA, then five year clock starts at that time.
If an existing Roth IRA, the amount rolled in uses the five-year clock of the existing Roth IRA. 1.408A-10 Q&A 4 |
The five-taxable-year period starts on the first year of the five-year-period for the Roth contributions made in the receiving plan.
Note: the five-year-taxable period from the distribution plan is not carried over to the recipient plan.
1.402A-1 Q&A 5c |
Five-year-taxable period tracking begins with the start of the Roth IRA. So if a new Roth IRA, then five-year clock starts at that time.
If an existing Roth IRA, the amount rolled in uses the five-year clock of the existing Roth IRA. 1.408A-10 Q&A 4 |
Reporting |
Roth Amount, Earnings and the Beginning date of the five-taxable-year period information or if a qualified distribution
to be provided within 30 days of the Direct Rollover.
1.402A-2 Q&A 2(a) (1) |
Roth Amount, Earnings, and the beginning date of the five-year-taxable period information,
or
if a qualified distribution
to be provided within 30 days of the Direct Rollover.
Note: Although it seems unnecessary to report the first day of the five-year-period when directly rolling to a Roth IRA, the regulations state to provide this in the report when a direct rollover is made from a designated Roth. |
Roth Amount, Earnings,
or
if a qualified distribution
to be provided upon request within 30 days of request
1.402A-2 Q&A 2(a)(1) and 2(b)
New report to be issued by recipient institution; details to be announced by IRS.
1.402A-2 Q&A 3 |
Roth Amount, Earnings
or,
if a qualified distribution
to be provided upon request of participant within 30 days of request.
1.402A-2 Q&A (a)(1) and 2(b)
New report to be issued by recipient institution, details to be announced by IRS.
1.402A-2 Q&A 3 |
Other |
This is the exclusive method to move the after tax portion of the Roth 401(k) to another Roth 401(k)
1.402A-1 Q&A 5a |
The AGI limitation for eligibility for a Roth IRA contribution does not apply to the ability to roll a Roth 401(k) into a Roth IRA.
1.408A-10 Q&A 2 |
A nonqualified distribution of a Roth 401(k) requires a pro rata distribution of earnings and after-tax amounts.
1.402A-2 Q&A 2 |
The AGI limitation for eligibility for a Roth IRA contribution does not apply to the ability to roll a Roth 401(k) into a Roth IRA. 1.408A-10 Q&A 2 |
| *If a partial rollover, then taxable portion of nonqualified distribution is rolled in first. |
| Other Rollover Issues |
| Restriction on Roth IRA |
403(b) Plan Rollovers |
A Roth IRA may not be rolled into a Roth 401(k) or a Roth 403(b).
1.408a-10 Q&A 5 |
The rules applicable to rolling a Roth 403(b) to another Roth 403(b) or to a Roth IRA are similar to the Roth 401(k) rules. A direct rollover from a Roth 403(b) to a Roth 401(k) or vice versa is permitted by the PPA. |
To learn more, call 973-492-1880 or e-mail info@mhco.com.
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