Roth IRA Rollover back into 401(k)

[mlp0816]

Have a client who lost his job and rolled the balance within a 401(k) (with a Roth provision) into an Roth IRA.

He has since found employment and would like to roll the Roth IRA into his new company's 401(k) (that allows rollovers and has the Roth provision).

The service provider that is managing the Roth IRA won't allow it and just keeps saying, "it's not allowed because it's a Roth IRA going back to a 401(k)'??? can anyone help?

Thanks.

[GMK]

https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

[mlp0816]

interesting.... so it looks like you can roll from a 401(k) into a Roth IRA but once it's there, you can't roll it back into a 401(k) (even if the 401(k) allows the Roth provision?

[Lou S.]

interesting.... so it looks like you can roll from a 401(k) into a Roth IRA but once it's there, you can't roll it back into a 401(k) (even if the 401(k) allows the Roth provision?

Correct.

[mlp0816]

thank you... there must be a reason that you can perform the same action on the Pre-tax side (from a 401(k) to a Traditional IRA, back to a 401(k) and not for a Roth?

I will inform my client... thank you.

[Lou S.]

thank you... there must be a reason that you can perform the same action on the Pre-tax side (from a 401(k) to a Traditional IRA, back to a 401(k) and not for a Roth?

I will inform my client... thank you.

If there is I'm not sure the IRS saw fit to disclose their logic.

But my best guess has to do with tracking basis on "non-qualified ROTH distributions" pre-59.5 and pre 5-year aging.

[Mr Bagwell]

FWIW, the pretax has no start year, so moving from 401k to IRA and back and forth really is of no consequence. The Roth could be tricky because of the start date of the Roth basis and 5 year timing. Maybe the regulation actually made this easier......go figure.

The client having the money in the Roth IRA is advantageous for the future because the 5 year clock has started. The client could roll his future Roth money into the Roth IRA upon retirement and have the 5 year hold rule already satisfied. No RMD's....

Just my thoughts...

[Mr Bagwell]

you beat me to it Lou.

[mlp0816]

I can buy the trickiness to the 5 year rule but you would think with the sophistication of tracking basis these days, we would be able to accommodate.. but I certainly thank all for their input!