Opportunity for In-Plan Roth Conversion Expanded

Included in the Small Business Jobs and Credit Act of 2010 was a provision which enabled participants in 401(k) plans to convert their pre-tax salary deferral contribution accounts into after-tax Roth accounts through in-plan Roth rollover. Until that option was added, Roth conversion could be accomplished only through direct rollover from the plan to a Roth IRA. At that time, however, in-plan Roth rollover was available only to participants who then were eligible for distribution from the plan. Consequently, unless and until the participant had attained age 59-1/2 and unless the plan permitted in service distributions, in-plan Roth rollover was not an option.

Under the American Taxpayer Relief Act of 2012, the availability of in-plan Roth conversion is extended, on a permanent basis, effective January 1, 2013, to all participants with pre-tax salary deferral contribution accounts, whether or not otherwise is eligible for distribution. Although the original 2010