Rollover from an IRA to a Qualified Plan

[Guest carsca]

It is my understanding that EGTRRA provides that participants can now make rollover contributions of all amounts from an IRA to a qualified plan (other than a rollover of after-tax amounts).

My question:

After EGTRRA, can a profit-sharing plan provide that it will only accept rollovers from conduit IRAs (recognizing that the term "conduit IRA" really has no meaning anymore, the plan would provide that it will accept rollovers from an IRA, but only to the extent such amounts are attributable to a qualified plan)?

Thanks in advance.

[Jean]

What is the advantage to imposing this type of restriction?

[Guest carsca]

The advantage is that the Plan can continue to operate under the pre-EGTRRA rules and avoid the administrative headaches of dealing with participants' personal (as opposed to plan) IRAs.

[mbozek]

Since a qualified plan is not required to accept rollovers it could elect only to receive rollovers from a conduit IRA but I dont know what hassles there would be in dealing with personal IRA accounts. The Plan admin will refuse to accept after tax amounts in the qual plan which are separately accounted for in the IRA. Frankly it may be more difficult to to determine if the amount transfered from an IRA originated in a quaified plan then separating after tax money in the IRA which must be separately accounted for.

[2muchstress]

I would agree with Mbozek that these restrictions don't make much practical sense. However, since the document would need to be amended to accept the provisions of EGTRRA, if you didn't amend your document, you would have to operate under Pre-EGTRRA rules.