Roth to Roth 401k Rollovers
Hello,
Will we ever be able to roll a Roth IRA into a Roth 401k? Any idea why this remaining rollover rule continues to be excluded from all the recent legislation?
Thank you.
Hello,
Will we ever be able to roll a Roth IRA into a Roth 401k? Any idea why this remaining rollover rule continues to be excluded from all the recent legislation?
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2023-02-17 21:05
Probably two reasons. First, the tax rules for Roth IRA distributions differ from Roth 401k plans and the second reason is that Roth IRA owners do a poor job of tracking their Roth IRA basis of regular and conversion contributions, so the Roth 401k administrator could not depend on receiving accurate basis figures. Many Roth 401k participants plan to roll the Roth 401k into their Roth IRA in order to take advantage of the more favorable Roth IRA ordering rules. In such a case, the Roth 401k is required to provide the accurate basis in Box 5 of the 1099R, which can then be incorporated into the Roth IRA basis.
Permalink Submitted by David Mertz on Fri, 2023-02-17 21:45
Because of the more favorable ordering rules for distributions from Roth IRAs, few people would find it beneficial to move Roth IRA funds to a Roth 401(k) even if they were permitted to do so. The only reasons I can think of where it might make sense is to take advantage of possibly better creditor protection in the 401(k) and to be able to take a loan from the balance.
Permalink Submitted by Randy Garcia on Tue, 2023-02-21 18:04
There is a distinction between the tax treatment of Roth IRA withdrawals and Roth 401k withdrawals. Good question.