“To amend the Internal Revenue Code of 1986 to permit rollover contributions from Roth IRAs to designated Roth accounts.”
No CRS summary available for this bill.
This section permits direct trustee-to-trustee rollovers from an eligible Roth IRA—or in an automatic portability transaction (as defined in IRC §4975(f)(12)(A)(i))—to a designated Roth account (i.e., Roth contributions in a 401(k), 403(b), or governmental 457(b) plan), treating such amounts as nontaxable rollover distributions under Roth IRA rules and as rollover contributions under designated Roth account rules. An eligible Roth IRA is the individual's sole Roth IRA (other than one established under IRC §401(a)(31)(B)(i)) with a balance not exceeding the amount in IRC §401(a)(31)(B)(ii); the full rollover amount (including earnings) is treated as investment in the contract (i.e., nontaxable basis). (Thus, this facilitates consolidation of small Roth IRA balances into employer plans, including via automatic portability services.) The section also modifies the designated Roth account's 5-year qualified distribution period to start at the earliest of prior dates or, for automatic portability rollovers from a Roth IRA, the first taxable year of contributions to the source plan (i.e., the eligible retirement plan transferred to the Roth IRA). The changes apply to amounts paid or distributed after enactment.