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?

[rocknrolls2]

No guidance has as yet been issued, but to respond to your questions, it will most likely be an optional rather than a mandatory provision, the tax reporting will most likely be that this would be reported on the 1099-R for the year, although there may be a new distribution code since this is a "Roth conversion" type of distribution and not a rollover in the classic sense. Finally, the plan sponsor of the distribution most likely would have no way of knowing the participant's AGI and would have no obligation to prevent an employee from making such a rollover. In all likelihood, the plan sponsor's obligation is to merely issue the 402(f) notice with a statement that the rollover will not be given effect if the participant's AGI exceeds $100,000 or the participant files his/her tax return claiming married filing separately status.