The IRS has released a 12-page notice (PDF) providing guidance in question-and-answer form for employers that want to offer their 401k or 403b participants the opportunity to move money from a regular account to a designated Roth account within the same plan. This guidance was on a fast track so that employers could make this opportunity available before the end of 2010 for those participants who want to take advantage of the special rule, available only this year, to delay the reporting of income from a conversion — splitting it between 2011 and 2012 instead of reporting it as 2010 income. (more…)
Archive for the ‘401k’ Category
New Guidance on In-Plan Roth Conversions
Saturday, November 27th, 2010Roth Conversions Within Employer Plans
Friday, September 24th, 2010As of September 27, 2010, employees with 401k or 403b accounts can do a Roth conversion without taking money out of the plan — but only if the employer takes steps necessary to permit these conversions. Here are questions and answers about these provisions. (more…)
Withdrawals That Cause Hardship
Monday, August 23rd, 2010News reports indicate a record number of people are taking hardship withdrawals from their 401k accounts. As the name suggests, the rules permitting these withdrawals are intended to provide a measure of relief from economic hardship. In most cases, though, people taking these withdrawals will end up suffering more hardship, not less. (more…)
Senate Would Expand Roth Accounts
Wednesday, June 30th, 2010Action in the Senate June 29 may result in expanded access to Roth accounts. One provision would take effect upon enactment, which is on a fast track. Before it can become law, the provision must be approved by the House of Representatives. (more…)
Forbes Quotes Us on Roth Conversions
Thursday, May 20th, 2010Forbes quotes us in this article about converting from a traditional 401k account to a Roth IRA. In case you came here from that article looking for our piece discussing strategies available for isolating basis in a 401k conversion, that would be right here.
Final Regs on 401k Diversification
Thursday, May 20th, 2010The Pension Protection Act of 2006 added rules requiring 401k plans (and certain others) to give participants an opportunity to change from an investment in stock of the company where they work to a diversified investment. Generally you have this right from day one for your own contributions to the plan, and the plan must permit this for company contributions when you’ve completed three years of service. Final regulations (PDF) have been issued providing details that may be of interest to plan designers and administrators. Changes from the proposed regulations are relatively minor but may be helpful, including a clarification that reinvestment of dividends on employer stock won’t create a violation of the rules.
