Guidance on Roth Rollovers Lifts Long-Standing Ambiguity, Analysts Say

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Oct. 3 —  Recently released IRS guidance on rollovers of after-tax money to Roth individual retirement accounts cleared up ambiguity that had existed for years, practitioners said.

The guidance in proposed rules (REG-105739-11) and accompanying guidance in Notice 2014–54 clarified that plan participants can transfer after-tax savings from their retirement plans to Roth IRAs.

“The ruling is great, it's what people thought it was. When you get a distribution you can really direct your money any way you want and most people want to direct it to have a tax-free result. So it confirms that you can take your after-tax money and put it in your pocket, or put it into a Roth IRA,” said Elizabeth T. Dold, a principal at Groom Law Group Chartered in Washington.