Rollovers to Roth IRAs Under PPA 2006

[Guest PGH.ERISA]

Under Section 824 of the Pension Protection Act of 2006, certain taxable amounts can be directly rolled over to a Roth IRA beginning in 2008, if certain requirements are met regarding modified adjusted gross income and tax filing status (if married). It is not clear to me from the statute and the legislative history, however, whether indirect rollovers are also permitted in that case; i.e., if a participant receives a taxable distribution in cash (after 20% withholding), can that amount be rolled over to a Roth IRA within 60 days of the distribution? Can anyone provide a cite one way or the other?

[Guest PGH.ERISA]

I just received an e-mail from the IRS that they believe that an indirect rollover is also permitted, but they did not cite to any particular IRS pronouncement.

[Appleby]

I t does not appear that indirect rollovers apply. The title of the section is for Direct Rollovers. And every other document, including the technical explanation says direct rollovers.

I would'nt place any value on the e-mail. I have seen too many from them that include inaccurate information.

[Bird]

I agree with Appleby. Direct rollovers only. I remember seeing something stressing that point, but I can't remember how official it was. But I think the statute is clear enough.

[GMK]

I think yesterday's Notice 2008-30 answers this.

From Q&A-1:

"Q-1. Can distributions from a qualified plan described in Section 401(a) be rolled over to a Roth IRA?

A-1. Yes. The rollover can be made through a direct rollover from the plan to the Roth IRA or an amount can be distributed from the plan and contributed (rolled over) to the Roth IRA within 60 days. ..."

Must be an eligible rollover distribution and still have to meet income and filing status rules.

[Guest PGH.ERISA]

I concur. What is in the Notice is fully consistent with what the IRS e-mailed me recently and what is in Publications 575 and 590.