Roth Rollover not allowed to 401k
Hi:
Would you please explain why, if plan allows, a TIRA can be rolled into a 401k, but a Roth IRA cannot be rolled into a DRA? Is it due to 5 year rule? Ordering rules? Accounting headache? Thx.
Hi:
Would you please explain why, if plan allows, a TIRA can be rolled into a 401k, but a Roth IRA cannot be rolled into a DRA? Is it due to 5 year rule? Ordering rules? Accounting headache? Thx.
Permalink Submitted by Alan - IRA critic on Mon, 2022-04-25 22:06
The tax code does not allow a Roth IRA to be rolled into any other type of account and never has. As to why, employers might not have wanted the accounting headache, and when Roth 401ks were originated there were no in plan Roth rollovers at the time. IRRs require a more costly and detailed accounting platform so at the time this did not exist so there was no way to incorporate Roth IRA conversions into a Roth 401k. There might well be other reasons. That said, most taxpayers would not want their Roth IRA balance to be rolled into a Roth 401k since they would lose the more favorable ordering rules, would lose investment flexibility and control, and balances would be subject to RMDs.