The Internal Revenue Service (“IRS”) issued Notice 2013-74 (the “Notice”) in December 2013 which provided further guidance on rollovers within a retirement plan to designated Roth accounts in the same plan [In-Plan Roth Rollovers, (“IRR”)]. The Notice addresses issues relating to IRRs in three parts: Part A addresses the application of Notice 2010-84 to the IRRs of otherwise non-distributable amounts allowed under the American Taxpayer Relief Act of 2012 (“ATRA”); Part B clarifies additional rules applicable to IRRs of otherwise non-distributable amounts allowed under ATRA; and Part C provides guidance on additional rules which are applicable to all IRRs. Review this articles to learn more about inplan rollovers - O'Connor Davies - NY CPA Firm.

1. January 2014
Employee Benefit Plans Considerations
Additional Guidance on In-Plan Roth Rollovers
Louis F. LiBrandi, Principal
The Internal Revenue Service (“IRS”) issued Notice 2013-74 (the “Notice”) in December 2013
which provided further guidance on rollovers within a retirement plan to designated Roth
accounts in the same plan [In-Plan Roth Rollovers, (“IRR”)]. The Notice addresses issues
relating to IRRs in three parts: Part A addresses the application of Notice 2010-84 to the IRRs
of otherwise non-distributable amounts allowed under the American Taxpayer Relief Act of
2012 (“ATRA”); Part B clarifies additional rules applicable to IRRs of otherwise nondistributable amounts allowed under ATRA; and Part C provides guidance on additional rules
which are applicable to all IRRs.
Louis F. LiBrandi
Principal
llibrandi@odpkf.com
212.286.2600
Background
Plan sponsors have been waiting for details on rollovers within retirement plans to designated
after-tax Roth accounts. ATRA had liberalized the rules governing in-plan transfers of pre-tax
amounts into a Roth account.
Significant modifications made by the Notice include:
There is no longer a requirement that the participant be eligible for a distribution.
Amounts rolled over (and applicable earnings) to a designated Roth account remain
subject to the distribution restrictions that were applicable to the amount before the
in-plan Roth rollover. Therefore, a 401(k) plan participant who has had a severance
from employment makes an in-plan Roth rollover of an amount from the participant’s
pre-tax elective deferral account prior to age 59½; that amount (and applicable
earnings) may not be distributed from the plan prior to attainment of age 59½ or the
occurrence of another permitted event for a 401(k) plan (e.g., death, disability,
severance of employment, etc.).
Withholding does not apply to an IRR of an otherwise nondistributable amount.
Consideration by a participant electing an IRR may need to increase his/her tax
withholding or make estimated tax payments to avoid an underpayment penalty.
For purposes of the 5 taxable years holding period for a Roth account, the period
begins on the first day of the first taxable year in which the participant makes the
IRR.
A revised Code §402(f) notice is not required for an IRR of an otherwise
nondistributable amount.

2. Amendment Needed for Plan
Contact:
New York, NY
212.286.2600
212.867.8000
Harrison, NY
914.381.8900
Stamford, CT
203.323.2400
Paramus, NJ
201.712.9800
Cranford, NJ
908.272.6200
New Windsor, NY
845.220.2400
Wethersfield, CT
860.257.1870
One significant portion of the guidance confirms the extension of the IRS deadline until
December 31, 2014 or the last day of the first plan year in which the amendment is effective, if
later than the adoption of the amendment. Modifications to these deadlines are applicable for
safe harbor 401(k) plans, certain 403(b) plans, and for a governmental 457(b) plan which
permitted an IRR in 2013 or 2014. Plans are allowed to restrict the contribution component
[e.g., elective deferrals, employer matching and nonelective contributions, including QMACs
and QNECs, and annual deferrals to governmental 457(b) plans eligible for IRRs], and the right
to make an IRR is not a protected benefit under Code §411(d)(6) and can be discontinued.
If you would like more information or have any questions, please contact Louis F. LiBrandi at
(212) 286-2600; llibrandi@odpkf.com
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