Non-rollover IRA money rolled into qualified plan; treated like a deem

[katieinny]

I understand that under EGTRRA qualified plans can accept rollovers of IRA money, even if the IRA did not meet the conduit IRA requirements.

Would these rollovers come under the deemed IRA rules, or treated like rollovers from conduit IRAs?

[four01kman]

It is my understanding they are to be treated as if they were a "conduit" IRA.

[katieinny]

The client wants to be able to include the IRA money as part of the plan balance for loan purposes. I don't think that "deemed IRA" money could be treated that way.

[four01kman]

Without checking, I don't remember if the IRA money retains its character once its in the qualified plan for loan purposes. Sorry.

[Alf]

The IRA $ would just be a rollover, not a deemed IRA. I don' t know why rollover IRA amounts can't be available for loans.

[katieinny]

So, even if the money is rolled into a QP from a conduit IRA, it cannot be included in the plan balance for determining the amount available for a loan?

[Guest Remysis]

Whatever the source, as long as it is now permitted post-EGTRRA to be rolled over into the qualified plan, it is simply treated like any other rollover contribution to the qualified plan. The rollover contribution loses any prior character (with the exception of after-tax money's that have to be separately accounted for) and can be aggregated with any other rollover contributions.

Rollover contributions may be included in determining the amount available for a loan, as long as it isn't otherwise prohibited by design under the terms of the plan. Note that even if the plan doesn't permit loans be taken from the rollover account, the rollover account may be included in measuring the account balance for determining the maximum loan amount under the section 72(p) rules.

[katieinny]

Thanks for clearing that up.