Senate Approved Bill Would Allow Roth Accounts in 457 Plans

September 17, 2010 (PLANSPONSOR.com) – Provisions in a bill passed by the U.S. Senate won’t just help 401(k) plan participants.

A summary of bill provisions by the Journal of Accountancy says the Creating Small Business Jobs Act of 2010 allows participants in 457 plans to treat elective deferrals as Roth contributions, effective for tax years beginning after 2010. The Senate passed the bill on Thursday and sent it back to the U.S. House of Representatives.   

Also, under the bill, if a section 401(k) plan, section 403(b) plan, or governmental section 457(b) plan has a qualified designated Roth contribution program, a distribution to an employee (or a surviving spouse) from an account under the plan that is not a designated Roth account is permitted to be rolled over into a designated Roth account under the plan for the individual (see Roth 401(k) Provision in Broader Senate Bill). This provision is effective for distributions made after the date of enactment.  

Rebecca Moore
editors@plansponsor.com