pre-2008 roth 401(k) rollovers

[Guest Mr. Kite]

This may be a dumb question, but I'll ask it anyway --

How is a Roth IRA permitted to accept a Roth 401(k) rollover before 2008? Although 402A©(3) provides for this type of rollover, under 408A©(6) a Roth IRA may only accept qualified rollover contributions, which are defined in 408A(e) as contributions from another Roth IRA or from a traditional IRA. How does 408A shoehorn in these rollovers?

[Gary Lesser]

Code Section 408(e), as amended by P.L. 109-280 applies to distributions after 2007. As ameded, the restrictions you mentned will no longer apply to distributions (after 2007). It can be done--

Sec. 1.408A-10 Coordination between designated Roth accounts and Roth IRAs

Q-1. Can an eligible rollover distribution, within the meaning of section 402©(4), from a designated Roth account, as defined in A-1 of § 1.402A-1, be rolled over to a Roth IRA?

A-1. Yes. An eligible rollover distribution, within the meaning of section 402©(4), from a designated Roth account may be rolled over to a Roth IRA. For purposes of this section, a designated Roth account means a designated Roth account as defined in A-1 of § 1.402A-1.

Q-2. Can an eligible rollover distribution from a designated Roth account be rolled over to a Roth IRA even if the distributee is not otherwise eligible to make regular or conversion contributions to a Roth IRA?

A-2. Yes. An individual may establish a Roth IRA and roll over an eligible rollover distribution from a designated Roth account to that Roth IRA even if such individual is not eligible to make regular contributions or conversion contributions (as described in section 408A©(2) and (d)(3), respectively) because of the modified adjusted gross income limits in section 408A(b)(3).

Hope this helps.

[masteff]

Rollover of a designated Roth account to a Roth IRA was established by EGTRRA section 617 ( http://www.irs.gov/pub/irs-utl/egtrra_law.pdf ). Specifically it added language at 408A(e) which cross references 402A©(3)(A). This language was effective for taxable years beginning after Dec 31, 2005.

This should not be confused w/ the further changes that result from PPA, which is the PL Gary cited.

EDIT: Quick thought... looking back at your question... might need to make sure you're looking at the most current version of 408A.