Rollovers of after-tax funds to Roth IRAs

[Guest PGH.ERISA]

IRS Notice 2008-30 did not specifically address this issue, but can anyone think of a reason why after-tax funds cannot be rolled over to a Roth IRA beginning this year (assuming the income and tax filing status requirements are met)?

[Guest MPLipp]

I see you didn't receive any responses to your query. I'm trying to find authority for the same question. However, the Kiplinger Tax Letter for July (Special Issue) says you can in a small blurb entitled "Good news if you plan to convert a 401(k) directly to a Roth IRA: New IRS rules offer a sweet deal for any after-tax contributions". I'd like to find something more authoritative that makes it clear that this can be done.

[masteff]

http://benefitslink.com/boards/index.php?showtopic=37698

[Guest MPLipp]

I found the same site, but does this mean that the modified AGI limit applies? Page 64: "Any amount rolled over is subject to the same rules for converting a traditional IRA into a Roth IRA."

[masteff]

http://benefitslink.com/boards/index.php?showtopic=36196

[Appleby]

IRS Notice 2008-30 did not specifically address this issue, but can anyone think of a reason why after-tax funds cannot be rolled over to a Roth IRA beginning this year (assuming the income and tax filing status requirements are met)?

After-tax funds can be converted to a Roth IRA, if the individual is eligible for the conversion. However, IMO the pro-rata distribution rules will apply, and the only way to convert just the after tax amount is to first rollover the pre-tax amount to an eligible retirement plan IMO. My response is based on the current distribution rules for QPs, as there is nothing available that says the rules are different for conversions.