<nobr>Jul 12, 2010</nobr>

Baucus Bill Would Allow Rollover of Pretax 401(k) Balances to Roth IRAs

Senate Finance Committee Chairman Max Baucus (D-MT) recently unveiled legislation (H.R. 5297, the Small Business Jobs Act) that would provide approximately $12 billion in tax cuts targeted at small businesses that also includes a provision that would allow rollovers from elective deferral plans to Roth designated accounts.

The Senate plans to consider the legislation this week.

According to a summary, the bill would allow 401(k), 403(b), and governmental 457(b) plans to permit participants to roll their pre-tax account balances into a Roth account. The amount of the rollover would be includible in taxable income except to the extent it is the return of after-tax contributions. If the rollover is made in 2010, the participant could elect to pay the tax in 2011 and 2012. Plans would be permitted to allow these rollovers immediately upon enactment.

The provision is estimated to raise $5.1 billion over ten years, and is being used to help offset the $12 billion cost of the overall bill.

Questions or comments on this issue should be addressed to Kathryn Ricard (kricard@eric.org).

###


Websites:

Senate Amendment to H.R. 5297

Summary of H.R. 5297

Back to Previous Page