Roth 401(k) Contributions

[Appleby]

Final Roth 401(k) Regs

http://www.treas.gov/press/releases/js3068.htm

[Tom Poje]

Interesting. while an excess contribution of Roth is not includable in income, the gains attributed to that excess contribution are includable as income.

[Belgarath]

Although watch out for an excess Roth deferral that isn't distributed until after April 15th of the following calendar year. As I read things, this IS taxable - therefore double taxation sice it was already taxed prior to deferral.

(Just realized that the term "excess deferral" means different things to different people, so to clarify, I mean a 402(g) excess - dollar amount exceeded.)

[TBob]

Belgarath - Can you elaborate on how you came to that conclusion. I read through the regulations but did see anything that would lead me to that conculsion. Is this one of those "it's what they didn't say that counts" situations?

[Guest mjb]

Reg -1(f)(3)(i) provides that roth contributions are treated as employer contributions for the purpose of section 402 which includes taxation of excess elective contributions under 402(g)(2). This makes sense because otherwise there would be no tax penalty imposed on an employee whose Roth contributions exceed the 402(g) limit and are not withdrawn since the funds would otherwise be exempt from taxation upon distribution. IRC 402(g)(2)(A) effective 1/1/06 includes excess roth contibutions as amounts which are subject to taxation upon distribution unless removed from the plan by 4/15 and IRC 402A©(1)(B) defines a roth contribution as an elective deferral which the employee designates as not being excludible from income.

[Belgarath]

See 402A(d)(3). There's nothing I saw that changes this.

[TBob]

Thanks!

[Guest diannesdesigns]

Thanks for the pdf link.

ok one question...if "a traditional IRA may be converted to a Roth IRA, but section 402A

does not provide for a conversion of a pre-tax elective contribution account under a

qualified cash or deferred arrangement to a designated Roth account...",

can I rollover my Roth IRA to a Roth 401(k)?

can I rollover my Roth 401(k) to a Roth IRA?

[JDuns]

can I rollover my Roth IRA to a Roth 401(k)?

can I rollover my Roth 401(k) to a Roth IRA?

No - you can't roll from Roth IRA to Roth 401(k)

Yes - you can roll from Roth 401(k) to Roth IRA

[KJohnson]

On a rollover from a Roth 401(k) to a Roth IRA there are two separate five year holding rules that apply. Below are the examples from the proposed Roth distribution regs. This might get a little tricky on tracking basis in some instances...

Example 1. Employee D, who is over age 59½, takes a distribution from D's designated Roth account in 2008, prior to the end of the 5-taxable-year period of participation used to determine qualified distributions from a designated Roth account. The distribution is an eligible rollover distribution and D rolls it over in accordance with sections 402© and 402A©(3) to D's Roth IRA, which was established in 2003 (i.e., established for more than 5 years). Any subsequent distribution from the Roth IRA of the amount rolled in, plus earnings thereon, would not be includible in gross income (because it would be a qualified distribution within the meaning of section 408A(d)(2)).

Example 2. Assume the facts are the same as in Example 1 except that the Roth IRA is D's first Roth IRA and is established with the rollover in 2008, which is the only contribution made to the Roth IRA. If a distribution is made from the Roth IRA prior to the end of the 5-taxable-year period used to determine qualified distributions from a Roth IRA (which begins in 2008, the year of the rollover which established the Roth IRA) the distribution would not be a qualified distribution within the meaning of section 408A(d)(2), and any amount of the distribution that exceeded the portion of the rollover contribution that consisted of investment in the contract is includible in D's gross income.

Example 3. Assume the facts are the same as in Example 2 except that the distribution from the designated Roth account is after the end of the 5- taxable-year period of participation used to determine qualified distributions from a designated Roth account. If a distribution is made from the Roth IRA prior to the expiration of the 5-taxable-year period used to determine qualified distributions from a Roth IRA, the distribution would not be a qualified distribution within the meaning of section 408A(d)(2), and any amount of the distribution that exceeded the amount rolled in is includible in D's gross income.

[Guest yvonne001]

can I rollover my Roth IRA to a Roth 401(k)?

can I rollover my Roth 401(k) to a Roth IRA?

No - you can't roll from Roth IRA to Roth 401(k)

Yes - you can roll from Roth 401(k) to Roth IRA

Can you tell me where I can find documentation stating that you can't roll from

a Roth IRA to a Roth 401(k).

Thanks.

[Guest mjb]

408A(e).

[E as in ERISA]

Proposed regulations 1.408A-10 #5

[Appleby]

Proposed Distribution Regulations