Roth 401k conversions?
I understand the new rule with converting to Roth IRA’s – can this be done within 401k’s? If so, does it have to be stated explicitly in the plan document/adoption agreement?
I understand the new rule with converting to Roth IRA’s – can this be done within 401k’s? If so, does it have to be stated explicitly in the plan document/adoption agreement?
Permalink Submitted by Alan Spross on Tue, 2010-01-12 21:15
The conversion cannot be done WITHIN a 401k, but it can be done FROM a 401k if employee is eligible for distributions. A conversion can be made directly from a 401k to a Roth IRA. But if you want to recharacterize it, the funds must go to a TIRA and cannot go back into the 401k plan.
Within the plan itself, all that can be done is to change the direction of future deferrals from the pre tax account to the Roth account IF the plan allows designated Roth contributions. The plan provisions would have to be checked to see if Roth contributions are allowed, but if so it would probably on all the screens or forms for electing the contribution direction.