401(k) Rollovers to Roth IRA

[Guest Tad77]

In 2008 will a 401(k) plan be required to permit rollovers of tax-deferred contributions to a Roth IRA or will the plan sponsor have an option not to permit rollovers to a Roth IRA? Also, has there been any guidance issued on how the plan sponsor will report the rollovers of the tax-deferred assets to the Roth IRA? Finally, will the plan sponsor be responsible for making certain that the distributee's AGI is under the income limits?

[Guest allancoleman]

In 2008 will a 401(k) plan be required to permit rollovers of tax-deferred contributions to a Roth IRA or will the plan sponsor have an option not to permit rollovers to a Roth IRA? Also, has there been any guidance issued on how the plan sponsor will report the rollovers of the tax-deferred assets to the Roth IRA? Finally, will the plan sponsor be responsible for making certain that the distributee's AGI is under the income limits?

My experience with numerous Roth conversions in the past , Tad77 , is that your Roth custodian ( distributee ) will have no idea if your AGI income will be under the limit and you as the tax payer are usually solely responsibe for determining if you'll be under that limit or not at the time you file that return .

401(k) custodians are supposed to allow these direct transfers from our 401(k)s to our Roth IRA in 2008 and I'm looking forward to them and have already closed one traditional IRA used for Roth conversions and will close my other one next year .

Sometimes 401(k) custodians have liberty on their 401(k) rules and regulations , but in this case , I think all will have to allow these direct Roth transfers .

Usually all my Roth conversions in the past were reported on a 1099 to the IRS as a IRA distribution and thereby ordinary income . These are reported on line 15a of your 1040 form as a IRA distribution . You then attach a Form 8606 to report that conversion . Probably as a 401(k) to Roth transfer , it'll be a 401(k) distribution .