Roth 401(k) Contributions

[Nassau]

If my client's plan provides for a Qualified Reservist Withdrawal are Roth 401(k) assets permitted to be withdrawn? Can you provide me with the Regulation and/Code that permits such withdraw?

[DMcGovern]

If my client's plan provides for a Qualified Reservist Withdrawal are Roth 401(k) assets permitted to be withdrawn? Can you provide me with the Regulation and/Code that permits such withdraw?

Our document default is to not provide QRWs, but I was curious about your question, so I asked TAG. Their response was that the Roth 401(k) deferrals are permitted to be withdrawn. Here are their cites:

Notice 2009-68

Under § 72(t)(2)(G) of the Code (as added by section 827 of PPA ’06 and modified by section 107 of the Heroes Earnings Assistance and Relief Tax Act of 2008, P.L. 110-245), the 10% additional income tax on early distributions described in § 72(t) does not apply to a qualified reservist distribution. A qualified reservist distribution generally means a distribution from an IRA, or from amounts attributable to employer contributions made as elective deferrals described in § 402(g)(3)(A) or © or § 501©(18)(D)(iii), made to an individual who was called to active duty for a period in excess of 179 days. Section 72(t)(2)(G) also provides that any individual who receives a qualified reservist distribution may re-contribute the distribution to an IRA without regard to the applicable dollar limitations on contributions.

Notice 2009-75

A designated Roth contribution is described in § 402A, which was added to the Code by section 617(a) of the Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107-16 (115 Stat. 103) (EGTRRA), for taxable years beginning after December 31, 2005. A designated Roth contribution is an elective deferral, as described in § 402(g)(3)(A) or © of the Code, that has been designated by an employee, pursuant to § 402A, as not excludable from the employee's gross income. Under § 402A(b)(2), designated Roth contributions made to the plan must be maintained in a separate account (a designated Roth account).

402(g)(3)Elective deferrals –

For purposes of this subsection, the term “elective deferrals” means, with respect to any taxable year, the sum of—

402(g)(3)(A) any employer contribution under a qualified cash or deferred arrangement (as defined in section 401(k)) to the extent not includible in gross income for the taxable year under subsection (e)(3) (determined without regard to this subsection),

402(g)(3)(B) any employer contribution to the extent not includible in gross income for the taxable year under subsection (h)(1)(B) (determined without regard to this subsection),

402(g)(3)© any employer contribution to purchase an annuity contract under section 403(b) under a salary reduction agreement (within the meaning of section 3121(a)(5)(D)), and

[KMG77]

There could be a document limitation that Roth contributions may only be withdrawn if the distribution is qualified. i.e. Age 59 1/2, 5 year aging...