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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. |
For more information regarding retirement plans and rollovers, please visit
www.irs.gov/ep.
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.
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