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ARTICLE · 12 FEBRUARY 2013

Fiscal Cliff Legislation Expands In-Plan Roth Conversion Opportunities

Morgan Lewis
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American Taxpayer Relief Act extends the existing, limited in-plan Roth conversion option to all amounts under plans that allow elective deferrals, including those amounts not yet eligible for distribution.

United StatesTax
Brian Dougherty
Brian Dougherty
R. Tracht
R. Tracht
Lisa Barton
Lisa Barton
George Tsai
George Tsai

American Taxpayer Relief Act extends the existing, limited in-plan Roth conversion option to all amounts under plans that allow elective deferrals, including those amounts not yet eligible for distribution.

The American Taxpayer Relief Act (ATRA), H.R. 8, which gained final approval from Congress on January 1, 2013, and was signed into law by President Barack Obama on January 2, 2013, expands section 402A(c)(4) of the Internal Revenue Code of 1986, as amended (the Code), by extending the existing, limited in-plan Roth conversion option to all amounts under plans that allow elective deferrals, such as 401(k) plans, including those amounts not yet eligible for distribution. The new rule applies to in-plan Roth conversions in taxable years after December 31, 2012. Plan sponsors should take this opportunity to consider possible amendments to their plan to add or expand an in-plan Roth conversion feature.

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