Permalink Submitted by Alan Spross on Sat, 2008-10-11 22:02
Yes, but there might be a few issues since the complete IRS Regs have not yet been issued on the direct Roth conversion.
The distribution rules plans apply to this should be the same as for traditional IRA direct rollovers. These rules include:
1) The ability to separately distribute pre 1987 after tax contributions. These could go to either type of IRA, but there is no reason now not to transfer them to the Roth IRA unless income eligibility is a problem. That issue ends after 2009.
2) A simultaneous direct rollover of post 1986 after tax funds to the Roth IRA and pre tax funds to a TIRA depends on the plan offering more than one direct rollover destination. If the plan does not, the after tax amount could be distributed to the former employee and the employee can roll it over to a Roth.
3) Attempting a Roth rollover of post 1986 funds only while leaving the pre tax funds in the plan may well present a problem due to the requirement that these after tax funds be distributed ratably with pre tax amounts. That would result in the Roth rollover being partly taxable. This is the issue that I think needs some IRS clarification.
Permalink Submitted by Alan Spross on Sat, 2008-10-11 22:02
Yes, but there might be a few issues since the complete IRS Regs have not yet been issued on the direct Roth conversion.
The distribution rules plans apply to this should be the same as for traditional IRA direct rollovers. These rules include:
1) The ability to separately distribute pre 1987 after tax contributions. These could go to either type of IRA, but there is no reason now not to transfer them to the Roth IRA unless income eligibility is a problem. That issue ends after 2009.
2) A simultaneous direct rollover of post 1986 after tax funds to the Roth IRA and pre tax funds to a TIRA depends on the plan offering more than one direct rollover destination. If the plan does not, the after tax amount could be distributed to the former employee and the employee can roll it over to a Roth.
3) Attempting a Roth rollover of post 1986 funds only while leaving the pre tax funds in the plan may well present a problem due to the requirement that these after tax funds be distributed ratably with pre tax amounts. That would result in the Roth rollover being partly taxable. This is the issue that I think needs some IRS clarification.