Retirement Plan Rollovers With The Pension Protection Act

The Pension Protection Act of 2006 gives taxpayers increased flexibility in rolling over retirement plans. However, the new rules have also increased the complexity behind the conditions that a plan can be rolled over. The IRS has given guidance by providing the following chart showing choices available to each type of tax-favored retirement vehicle, and the basis conditions that may apply. 

ROLLOVER CHART

		ROLL TO
		IRA	SEP-IRA	SIMPLE IRA	Roth IRA	457(b)	403(b)	Qualified Plan	Desig- nated Roth Account
	IRA	YES	YES	NO	YES, must include in income.	YES, must have separate accounts.	YES	YES	NO
	SEP-IRA	YES	YES	NO	YES, must include in income.	YES, must have separate accounts.	YES	YES	NO
	SIMPLE IRA	YES, after two years.	YES, after two years.	YES	YES, after two years. Must include in income.	YES, after two years. Must have separate accounts.	YES, after two years.	YES, after two years.	NO
	Roth IRA	NO	NO	NO	YES	NO	NO	NO	NO
	457(b)	YES	YES	NO	YES, after 12/31/07. Must include in income.	YES	YES	YES	NO
	403(b)	YES	YES	NO	YES, after 12/31/07. Must include in income.	YES, must have separate accounts.	YES	YES	NO
	Qualified Plan	YES	YES	NO	YES, after 12/31/07. Must include in income.	YES, must have separate accounts.	YES	YES	NO
	Designated Roth Account	NO	NO	NO	YES	NO	NO	NO	YES, if a direct trustee to trustee transfer.

Many types of allowable rollovers are subject to complex conditions that a chart cannot adequately address. An example of this is that a rollover from a regular IRA must be completed within a 60 day period, and may be made only once in a 12 month period.  A rollover from a qualified plan to another qualified plan or IRA may be made only if it is an "eligible rollover distribution" which do not include items such as required minimum distributions and hardship distributions.