Legal Alerts

IRS Issues Additional Guidance for In-Plan Roth Rollovers


On December 11, 2013, the IRS issued Notice 2013-74 to provide additional guidance regarding in-plan Roth rollovers (IRRs). IRRs may now be made available within 401(k), 403(b) and governmental 457(b) plans and include all contribution sources. Additionally, the requirement that the transferred funds be otherwise eligible for distribution is eliminated.

Highlights of Notice 2013-74 include but are not limited to:

  • Deadlines for amendments: Extended until December 31, 2014 (for 2013 and 2014 rollover amounts).
  • Distribution restrictions: Amounts for otherwise nondistributable amounts must be 100% vested and remain subject to previous distribution requirements.
  • Restrictions permitted: All plans may limit the type of contributions eligible for an in-plan Roth rollovers and the frequency of in-plan Roth rollovers.
  • Tax Implications: No voluntary or mandatory withholdings are required. A participant making an in-plan Roth rollover may need to increase withholding via payroll or make estimated tax payments.
  • Five taxable-year period: If the rollover is the employee's first contribution to the Roth account, the employee's five-year period for a "qualified distribution" begins on the first day of the first taxable year in which the employee makes the in-plan Roth rollover.

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