Informal Guidance on Reporting In-Plan Roth Conversions

In a post on its website, the IRS says the 20% mandatory withholding would not apply. In addition, the IRS gives guidance on how the in-plan conversion should be reported.

Document Excerpt

Section 2112 of the Small Business Jobs Act (Public Law 111-240), allows participants to make rollovers from their 401(k) and 403(b) plans to their designated Roth accounts (“in-plan Roth rollover”) after September 27, 2010.  The taxable amount rolled over is includible in income equally in 2011 and 2012, unless the taxpayer elects to include it in 2010.  The additional tax under section 72(t) does not apply to these rollovers.  Report the amount rolled over in box 1 (Gross distribution), the taxable amount in box 2a, and any basis in the rollover in box 5 (Employee contributions). Use Code G in Box 7 on Form 1099-R. Mandatory 20% withholding does not apply to in-plan Roth direct rollovers.


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