Roth (k) Rollovers

[PMC]

Difference of opinion here - Participant elects a rollover of his Roth (k) account from Plan A to Plan B and held in a Roth Rollover account in Plan B. Plan B allows other non-Roth (k) rollovers in too and allows an employee to take an in-service distribution of their Rollover account at any time for any reason.

Is the Roth Rollover account able to be withdrawn at any time similar to any non-Roth Rollover account and then it's just a matter of determining how much is taxed (proposed regs)? Or, does the Roth Rollover have to follow the availability rules for withdrawal of before-tax deferrals and Roth deferrals (i.e. hardship, 59 1/2 etc.)?

[namealreadyinuse]

By definition, a rollover has already satisfied the distribution requirements of the original plan. The receiving plan can allow distributions at any time.

[E as in ERISA]

If you need to prove it to someone, look at Answer 9 on the proposed 402A-1 regulations where they describe a situation where the Roth rollover is in a separate account from the other Roth contributions just so that you can preserve your ability to distribute it whenever you want. (Because if you commingle money with elective contributions, you generally subject the other money to the distribution rules to which the elective contributions are subject).

[JDuns]

It depends on the recipient's plan. Just because a plan allows in service distributions for regular 401(k) contributions or for regualr Roll-in contributions, the plan is not required to allow in service distributions for Roth 401(k) roll-in contributions.

Many plans will not allow any in-service distributions for Roth accounts because of the complexity in tracking the "investment in the contract". Since a roll-in contribution will not necessarily be all tax-free on distribution (depending on the age of the contributions when rolled in and whether the contribution was rolled directly from the other plan or within 60 days by the participant), many plans will not want to bother with the recordkeeping issues.

I come out that the in service distribution option is permitted but not required.