Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.
Compliance January 3, 2013
Fiscal Cliff Deal Extends Roth Conversions
January 3, 2013 (PLANSPONSOR.com) – While the fiscal cliff deal did not change the current tax treatment of retirement savings, it does include a provision for retirement plans that could generate tax revenue right away.
Reported by Rebecca Moore
The American Taxpayer Relief Act of 2012 includes a provision allowing for in-plan Roth conversions of defined contribution retirement plan accounts otherwise not distributable, without any income limitations. Previously, only amounts deemed distributable—such as upon attainment of age 59 ½ by a participant—could only be converted to Roth accounts.
The provision is effective January 1, 2013, but prior account balances are allowed to be converted.
According to news reports, the provision is expected to raise $12.2 billion in 10 years to help pay for the two-month delay of spending cuts in the deal.