IRA Rolled over to Qualified Plan

[Guest PensionAdministrator]

When an IRA is rolled over into a Qualified Plan, does it loss its "IRA status" as far as:

- Purchasing Life Insurance?

- Qualifying for a Loan?

[Appleby]

IRA assets that are rolled to a qualified plan assume the identity of qualified plan assets are subject to the rules thereof. I.e. these assets lose their IRA flavor

[katieinny]

I agree that if the rollover is coming from a conduit IRA where the assets were originally QP money, the rollover is not governed by the IRA rules once it is rolled to the QP. But, in light of the proposed regulations on "deemed IRAs," I'm not so sure we can assume a rollover from a regular, traditional or Roth IRA loses it's IRA status after being rolled into a QP.

Does anyone know if anything definitive has been issued on this?

[Guest Bob K]

I am not aware of anything that has been formally issued in writing. However, at last year's ASPA Annual Conference this question was posed to the IRS for their Q & A session.

The response was that funds from a traditional IRA also take on the characteristics of the qualified plan assets.

Of course, all these types of informal answers from the IRS are prefaced that they are only the opinion of the speaker and not official IRS policy

[mbozek]

I thought the revision of IRC 408(d)(3)(a) permits transfers of all pre tax funds in an IRA regardless of origin to a qualified plan without the need to restrict the funds as plan assets. The use of a conduit IRA is no longer requred except if the employee wishes to preserve 10 yr averaging or capital gains treatment.

[katieinny]

"without the need to restrict the funds as plan assets" is the key I'm looking for. I just want to be sure that the "deemed IRA" rules that say those assets are governed by the IRA rules, not the QP rules does NOT apply to rollovers from IRAs.