Recent IRS guidance clarifies a number of outstanding questions
regarding "in-plan conversions" of non-Roth balances to
Roth balances in 401(k), 403(b) and governmental 457(b)
plans. In particular, the guidance confirms that converted
balances are subject to the same distribution restrictions after
the conversion as they were prior to it.
On December 11, 2013, the Internal Revenue Service (IRS)
published Notice 2013-74 to provide guidance on
converting non-Roth balances to Roth balances in 401(k), 403(b) and
governmental 457(b) plan accounts. Although the IRS refers to
these as "in-plan Roth rollovers," we will utilize the
more commonly used term "in-plan Roth conversions" in
this summary. The new guidance clarifies rules relating to
in-plan Roth conversions of both distributable and nondistributable
account balances, along with new rules that apply to in-plan Roth
conversions of all account balances. Plan sponsors who permit
(or are considering permitting)
