Roth Rollovers

[DTH]

It has been my understanding that in order to for a plan to accept a direct rollover of designated Roth contributions the plan must allow designated Roth contributions. The IRS rollover chart points to a designated Roth account, which is defined in the Treasury regulations §1. 402A, Q&A 1, which I interpret to say the plan has to allow designed Roth contributions first. I also think that this concept is reinforced with the in-plan Roth "rollover" rules under §402A(c)(4)(B) where a plan must include a qualified Roth contribution program.

I have been challenged that a plan with no qualified Roth contribution program can accept a designated Roth account rollover. 

Does anyone have knowledge of any IRS guidance that says a plan with no qualified Roth contribution program can [or can't] accept a designated Roth account direct rollover.

Thanks.

[rcline46]

How about the challenger presenting their support first?  Why should we be always on the defensive?

[Kevin C]

You are close.  Look at 1.402A-1 again.  Q&A 5 says a distribution from a designated Roth account can be rolled directly into another designated Roth account.  As you mention, Designated Roth account is defined in Q&A 1 as a separate account to which Roth deferrals are permitted to be made (and satisfies certain other requirements).  If the plan doesn't allow Roth deferrals, it doesn't have a designated Roth account.

[ErisaGooroo]

Hello Everyone!

I have a situation where a Roth rollover was made in a prior year and just discovered.  The receiving plan did not and does not currently allow Roth deferrals to be made.  Per 1.402A-1, the recipient plan must otherwise accept Roth contributions. FYI...The rollover was between two 401(k) plans.

What is the correction for this type of failure?  My first thought is it is an ineligible rollover and must be reversed.

Any guidance is greatly appreciated.