Roth Contributions

[Nassau]

If a plan allows for Roth Contributions and Roth Rollovers, Can a participant rollover pre-tax deferrals from another qualified plan into the Roth rollover source in the Plan, effectively converting the contributions to Roth? Is this allowed?

[Lou S.]

Pretty sure that is allowed. The Plan that the funds are coming from though would issue a 1099-R showing the the funds were rolled over to a ROTH source; they would be taxable (but not sbject to the 10% penalty). Similar to an in-plan ROTH conversion.

However, I'm not 100% sure this can go Plan to Plan from pre-tax to ROTH. I know it can go directly to ROTH-IRA as described but there may be a prohibition on plan-to-plan in the pre-tax->roth rollover setting. Sometimes the IRS rules aren't always idential when going between different tax defered retirment vehicles.

[masteff]

Can NOT do qualified plan to qualified plan conversion.

Other options are to do an in-plan rollover conversion (assuming either your or the other plan offers that and the participant is eligible to do so) or to rollover to a regular or Roth IRA. But once in a Roth IRA, (under the current rules) it can not come back to a qualified plan.

After making everything relatively uniform w/ EGTRRA, they went and made it messy again.