The Small Business Jobs Act of 2010 permits in-plan rollovers to a Roth account effective for all distributions made after Sept. 27, 2010. Prior to this law, Participants had to roll money out of their retirement plan to a Roth IRA to invest after-tax.
In 2010 only, a one-time special tax rule allows a rollover from a taxable account to a Roth Account completed in 2010 can be included in income in 2011 and 2012.
Because of this unique opportunity, it was necessary for the IRS to release some guidance on questions that were not answered in the Small Business Jobs Act.
Notice 2010-84 (issued Friday November 26th) clarifies a number of issues regarding in-plan conversions to a Roth account (in-plan Roth rollovers) including:
- Clarifying that 401(k) and 403(b) plans may retroactively amend plans for in-plan Roth rollovers;
- 402(f) notices need to be modified to add in-plan Roth rollover information (although safe harbor notices do not require modification for 2010 and 2011); and
- Clarifying several taxation and distribution issues.
What Can Be Rolled Over
Any taxable, eligible rollover distribution can be rolled over (in-service or after termination distributions).
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