Portability after EGTRRA

[wmyer]

The below questions all relate to 2002.

1. Will a participant who elects to roll over 100% of his assets have to be given the OPTION of either rolling over everything or rolling over everything except her after-tax basis?

2. Can a participant elect to have his assets distributed to him (with appropriate withholding) and then roll over the entire amount, INCLUDING after-tax basis, to an IRA or another Qualified Plan within 60 days? If rolled over to another QP, will the new administrator take the participant's word as to how much is after-tax basis, or is some documentation necessary? I assume the new administrator will also have to track the after-tax basis?

3. If assets that include after-tax basis are rolled over from a QP to an IRA, can any of it be rolled over again to another QP at a later date?

[Guest dmj1998]

For 1 and 2 - it depends.

For 3 - I say I don't think so.

The questions you are asking appear to be more administrative in nature rather than legislative. Recordkeepers are definitely going to have to modify their processed to support these type of elections. At the very least, I would guess that AT basis will be more clearly defiend on the distribution statements that accompany payouts (if they don't already). Otherwise, I think legally you could do 1 or 2, but your plan may or may not support it. As for #3, I do not think AT basis is portable from an IRA to a QP, only from QP to QP or QP to IRA.

that's my 2 cents.

[Guest David G]

Have you gotten any more feedback to this question. I have been asking the same questions primarily about how much flexibilty the plan will have to give the participant in rolling over his aftertax money, all or part etc. (your question number 1)

[Appleby]

Regarding the rolling over of after tax QRP to QRP. According to EGTRRA 2001, such a rollover must be done as a direct rollover between the two plans. This would take care of that documentation issue as the issuing plan would be required to include information that the assets represented after-tax contributions

[Guest David G]

Does any one know if the plan will have to offer a participant receiving an after tax distribution the same rollover options that a participant gets with a distribution of pretax money under the old law? That is, will the participant be able to rollover part or all of the aftertax money and can those choices be different than what he decides to do with the pretax money?