Rollover IRA to 401(k) Plan

[Guest cxs]

I know this has been discussed but I am still confused. An employee takes a premature distribution from an IRA. He wants to roll this into the 401(k) Plan. Is this rollover "cleansed" of all IRA characteristics? Is there any reason that the IRA rollover must be segregated from other rollovers? Is a deemed IRA only applicable to new IRS money? I found guidance on deemed IRSs, but none on rollove IRAs. Can you direct me?

Thanks (I am very confused)

[Alf]

The QP has to have specific provisions allowing this type of IRA rollover for it to be permitted, but it will just be a normal rollover, not a deemed IRA. The fact that it was a distribution means it is cleansed of the IRA features (but after-tax money must still be tracked separately). You must confirm that it was not an inherited IRA and that it does not have after-tax money in it. Distributions of after-tax IRA money cannot be rolled over to a QP. The participant must be directly roll them over.

Deemed IRAs are only applicable to new contributions.

Do a search on benefitslink for EGTRRA rollover or portability changes and you should find plenty of explanations.