Roth 401(k) rollover to existing Roth IRA
Hi,
I recently separated from my previous employer and I hold a small amount ($2,500) in a Roth 401(k) through them. I am getting married in 2009 and our combined magi for 2009 will be over $100,000. I would really like to get those funds out to my existing Roth, if possible. However, the way I am reading the rules, I am not allowed to roll this $2,500 over to my existing Roth IRA until 2010 when the income limit is lifted.
Can anyone confirm this? I think it is silly that one cannot roll existing Roth 401(k) funds out to an existing Roth. I understand the $100k MAGI limit for conversions, but this seems like it should be a different issue.
I appreciate any comments.
Jason
Permalink Submitted by Alan Spross on Tue, 2008-12-30 22:01
This problem has apparently been fixed by the recent legislation, per following copy from a CCH summary of the changes made:
>>>>>>>>>>>>>>>>
The new law also clarifi
es that rollover distributions
do not reduce unemployment
compensation. Additionally,
the new law clarifi es that a qualifi
ed rollover contribution to a Roth
IRA from a Roth 401(k) or 403(b)
is not subject to the adjusted gross
income limit or other requirements
applicable to rollovers from non-
Roth eligible plans.
>>>>>>>>>>>>>>>>>
The original application of the income limit was a legislative error in the Pension Protection Plan, but it took this long for a technical corrections provision to be passed by Congress. You should now be able to do the transfer. Once these funds reach the Roth IRA, they follow the holding period of the Roth IRA, ie the time in the Roth 401k is lost, but this should not be a major problem.
Permalink Submitted by [email protected] on Tue, 2008-12-30 22:06
Great. Thanks Alan, I appreciate your timely response. Happy New Year!
Jason