“A bill to amend the Internal Revenue Code of 1986 to permit rollover contributions from Roth IRAs to designated Roth accounts.”
No CRS summary available for this bill.
This section permits direct trustee-to-trustee transfers from an eligible Roth IRA to a designated Roth account (i.e., Roth account in an employer-sponsored retirement plan such as a 401(k) plan) to be treated as nontaxable rollover distributions under IRC §408(d)(3)(A) and rollover contributions under IRC §402A(c)(3), including in automatic portability transactions (i.e., automatic rollovers of small balances by third-party providers). An eligible Roth IRA is the individual's only Roth IRA (other than one established under IRC §401(a)(31)(B)(i)) with a balance not exceeding the involuntary cashout threshold under IRC §401(a)(31)(B)(ii) (currently $7,000). The entire rollover amount is treated as nontaxable investment in the contract (i.e., basis), bypassing earnings taxation under IRC §72, and—for automatic portability rollovers from a source employer plan—the five-year qualified distribution period under IRC §402A(d)(2)(B) may use the source plan's first contribution year.