How Can a Plan Utilize the Roth In-Plan Rollover Correction Method?

Q: My plan does not allow for Roth in-plan rollovers, but we are interested in using the Roth in-plan rollover correction method. I read the Expert’s recent article on Roth in-plan rollovers, and wanted to clarify my understanding that, in order to use this method, my plan must specifically stipulate that Roth in-plan rollovers may be used for correction purposes. Is this correct?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Yes, your understanding is correct. The Roth in-plan rollover correction method is available even if your plan does not otherwise allow voluntary Roth in-plan rollovers.

However, to use this correction method, the plan must be amended to expressly permit it for correction purposes. The IRS noted that because this is a correction implemented pursuant to plan terms rather than a participant-elected benefit, you can add this specific correction language without being forced to open up elective Roth in-plan rollovers for all participants.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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