Peter Gulia Posted October 21 Posted October 21 Assume a participant severs from employment with a nonforfeitable account less than $7,000 (and more than $1,000) and the plan provides an involuntary distribution. Despite that small size, the account includes both Roth and non-Roth subaccounts. (For example, elective deferrals were Roth and matching contributions were non-Roth.) Assume the participant, after the proper notices, does not specify her preference for the distribution, invoking the plan’s default rollover. Does a plan's administrator with its service provider pay separately the Roth and non-Roth amounts? Or does a plan’s administrator and its service provider pay one sum, and instruct the default IRA provide on the distinct Roth and non-Roth amounts? Does a default IRA provider separately account for the Roth and non-Roth amounts? Does a default IRA provider put this in two IRAs? Or in one IRA with subaccounts? Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
Peter Gulia Posted October 21 Author Posted October 21 For the particular matter I’m now working on, I found my answer: An Ascensus recordkeeper agreement with an add-on for using Ascensus as the default-IRA provider says two IRAs—Roth and traditional. But is that way universal? Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
Bruce1 Posted October 21 Posted October 21 Peter I've never seen an IRA where they've had both pre-tax and Roth dollars in them. Even when doing rollovers it always comes in two checks.. Hope that helps. Peter Gulia, Paul I, Bri and 1 other 3 1
Popular Post Paul I Posted October 21 Popular Post Posted October 21 The plan administrator and its service providers will make separate payments of the Roth and non-Roth accounts. In addition to the fact that IRA providers will not take on the responsibility of splitting a distribution into Roth and non-Roth accounts, the plan has to report the distribution to the participant on a 1099R, and there is not enough room on one 1099R for all of distribution codes needed to report the distribution correctly if it was made in a single payment. In short, no IRA provider would accept a check with co-mingled amounts, and the plan would have no way to properly report the distribution to the participant. Peter Gulia, Bill Presson, FishOn and 2 others 4 1
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now