Skip Page Banner  
About This Blog

Bloomberg BNA's Pension & Benefits Blog is a special resource offered by Bloomberg BNA to provide commentary and insight on news and trends reported in our publications: Pension & Benefits Daily, Pension & Benefits Reporter, and the Benefits Practice Resource Center. The authors of the blog are members of our Pension & Benefits Publications Advisory Board and members of staff (who contribute summaries of some of their recent stories). 

The ideas presented here are those of individuals, and Bloomberg BNA bears no responsibility for the appropriateness or accuracy of the communications between group members. We reserve the right not to post comments that are abusive or otherwise objectionable.

Communications regarding the Pension & Benefits Blog may be directed to Dana Domone via e-mail to ddomone@bna.com.

PENSION AND BENEFITS
BLOG

Tuesday, February 5, 2013

Treasury, IRS Seek Input on Coming Guidance on Roth Transfers

by Florence Olsen

RSS

Whether and, if so, how to apply vesting rules to in-plan Roth transfers are among questions that a working group will try to answer as the Treasury Department and Internal Revenue Service prepare guidance on a new tax code provision created by recent fiscal cliff legislation, a Treasury official said Jan. 31 at the Los Angeles Benefits Conference.

The legislation, enacted into law in January as the American Taxpayer Relief Act of 2012 (Pub. L. No. 112-240), provided no language requiring that the amount be vested when it is transferred, George H. Bostick, benefits tax counsel in Treasury's Office of Tax Policy, said during a luncheon speech at the conference.

In preparing guidance, officials want to anticipate the possibility of forfeitures and other unpredictable events and, thereby, “avoid creating a trap for the unwary,” Bostick said. For example, an employee might pay taxes on a nonvested amount in a traditional Section 401(k) account before transferring it into a Roth account in the same plan and later have to forfeit that amount because it was not vested according to the plan terms, he said.
 
“If we allow that and somebody does forfeit, what will the [tax] treatment be? Those are the sort of vesting questions that come up,” Bostick said.
Subscription RequiredAll BNA publications are subscription-based and require an account. If you are a subscriber to the BNA publication and signed-in, you will automatically have access to the story. If you are not a subscriber, you will need to sign-up for a trial subscription.

You must Sign In or Register to post a comment.

Comments (0)