IRA Rollover

[Guest MCarey1]

I am sure I should know the answer to this, but I am just not sure.

Can a traditional IRA be rolled over to a Qualified plan? If so, does the document have to stipulate this?

Also, what are the advantages and disadvantages to doing this. Is there something regarding 5 year averaging that can be done with an IRA and not a qualified plan.

Hope this is not to dumb a question.

[papogi]

You can rollover amounts from a traditional IRA that represent the portion that would otherwise be taxable into a qualified plan. The 60-day rule still applies, so monitor the rollover closely. Depending on the make-up of your trad IRA, this may be the entire balance, or only a portion of it if you have made non-deductible contributions. The rules of the qualified plan are the limiting factor here. Check with the destination plan to be sure that they accept IRA rollover contributions.

[R. Butler]

After EGTRRA, generally traditional IRA money can be rolled over into a qualified plan. The document will state whether or not such rollovers are acceptable.

Whether or not such rollovers are advisable probably depends on who you ask. Income averaging may apply to the qualified plan, not the IRA. It is possible that an older participant would lose the ability to use income averaging if he/she rolled money from a non-conduit IRA to a qualified plan. There was article on this in the BenefitsLink newsletter a few weeks ago. If you search by topic in the Benefits Buzz you should find the article.

[Scott]

The 10% tax under Section 72(t) wouldn't apply, would it?

[Appleby]

The 10 % will not apply if the amount was rolled to an eligible retirement plan.