Non-deductible contributions in qualified plan

[Guest sritts]

Can non-deductible contributions in a QP be rolled over to an IRA account?

[Belgarath]

Now there's an interesting question.

I don't see why not. An employer contribution is allocable to plan participants whether or not it is currently deductible under 404. The employer bears the tax burden of excise taxes on nondeductible contributions. If they cannot be returned to the employer due to the exclusive benefit rule, any subsequent distribution to a participant should be eligible for rollover. IMHO.

There are situations, such as a return of elective deferrals under a 401(k) to correct a violation of 415 limits, that are NOT eligible rollover distributions, but that's really a separate question.

[Mary Kay Foss]

Before EGTRRA non-deductible contributions could not be rolled over to an IRA. Starting last year they can be

Nondeductible IRA contributions are reported on a special form--there is nothing comparable for QP nondeductible contributions

It can be done but requires more record keeping

[MGB]

Mary Kay,

I don't think the original question was referring to after-tax deductions by the participant, which your answer is referring to. I interpreted the question to be referencing an employer contribution that is not deductible by the employer for whatever reason.

I agree with the original answer that the deductibility at the plan sponsor level should have no bearing on whether a participant can roll it over.

[Guest sritts]

thank you all for your replies. My intent in the original question was regarding after-tax contributions. But, I do appreciate the feedback on the nondeductible employer contributions. I found that to be very useful as well.

[Alf]

Remember that it is a one-way street. After-tax money can go into an IRA, but cannot be rolled over into a qualified plan.