In-plan Roth transfers and conversions

[Guest JPIngold]

I was looking at adding the in-plan Roth transfer option to a plan (knowing I will need to adopt a plan amendment by the end of 2013) and thought that would take care of allowing that option for all participants in the plan without the need of adding in-plan Roth rollovers. I never amended the plan to allow in-plan Roth rollovers because I didn't like the limited use of it (because of the distributable event issue).

However, the way I read Section 902 of the ATR Act of 2012, it appears to me that I should add BOTH options at this point (which means adopting the rollover amendment now and then adopt the transfer amendment once that is available) because it appears that the Roth transfer option only works with plan assets "not otherwise distributable".

Therefore, if the plan has an age 59-1/2 in-service distribution option and I only adopt the in-plan Roth transfer option, a 62 yearold participant would not be able to convert pre-tax money to Roth money because it would otherwise be distributable.

Am I interpreting this correctly?

Thanks.

James

[ETA Consulting LLC]

You are. There are going to be record keeping considerations with respect to designated Roth amounts that are distributable at various points in time due to these transfers.

Good Luck!