Conduit IRA for Roth contributions?

[Guest jims]

What has been called a Conduit IRA allows you roll over a distribution from a 401(k) plan into an IRA and then preserve your right to then roll over that money back into another 401(k) plan. Now, you can roll over designated roth contributions from a 401(k) plan into a Roth IRA. But you can't make contributions to a Roth IRA and then roll over that money into a 401(k) Plan. However, is it possible to have a Roth conduit IRA? - make designated roth contributions in a 401(k), then rollover that balance into a new Roth IRA, then roll over only that money into a different 401(k) plan?

[J Simmons]

I think you may be StarTrekking--boldly going where no IRS official guidance has gone before. I've not understood why a Roth 401k plan cannot accept rollovers from Roth IRAs. Maybe it is due to difficulties tracking the 5-year rule. Whatever the logic, in this day and age of traditional IRA dollars (even those directly contributed to the IRA) being able to be rolled into a traditional 401k, but there being that prohibition of Roth IRA to Roth 401k, I suspect the reasons for that prohibition would apply and prohibit the rollover you are considering.

[masteff]

I think you may be StarTrekking--boldly going where no IRS official guidance has gone before.

Thanks for that chuckle, John.

And just to emphasize a point... EGTRRA effectively eliminated the concept of "conduit" IRAs. The term "conduit IRA" can generally be left out of all contemporary discussions of rollovers aside from the words being part of the name of some IRA accounts established prior to EGTRRA.

[jevd]

I think you may be StarTrekking--boldly going where no IRS official guidance has gone before.

Thanks for that chuckle, John.

And just to emphasize a point... EGTRRA effectively eliminated the concept of "conduit" IRAs. The term "conduit IRA" can generally be left out of all contemporary discussions of rollovers aside from the words being part of the name of some IRA accounts established prior to EGTRRA.

Although becoming a rare transaction these days, I believe a "Conduit IRA" is still used to preserve 10 year forward averaging for those individuals born 1/1/36 and prior to segregate assets rolled over from Qualified Plans from other IRA funds to roll back to a subsequent Qualified Plan and take a Lump Sum Distribution.. This ability still exists as far as I know but as I said above, a rare circumstance.