Rolling a Roth IRA Into a 403(b) Plan

“One of our older participants has some IRAs that she wishes to roll over into our 403(b) so that she can avoid taking required minimum distributions on them until she retires from here (she is 68, and plans on working here as long as she can). Our plan does accept rollovers so I believe that action is fine from our perspective, but I noticed that one of her IRAs is actually a Roth IRA. Would different rules apply to that?”

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

You are correct, rolling amounts held in a traditional IRA into an employer plan is generally permissible, a step often used to avoid having to take required minimum distributions while working. However, there are a few considerations: (1) as you note, rollover contributions must be allowed by the employer plan, and (2) only pre-tax amounts may be rolled into the 403(b) plan. That means that nondeductible IRA contributions and any after-tax amounts that were previously rolled into a traditional IRA, along with amounts held in a Roth IRA, may not be rolled over to your 403(b) plan.

We note that it is also important that this rollover occur prior to the year that the participant is due a required minimum distribution. Otherwise, any amount due as a required minimum distribution must be taken prior to the rollover of the remainder of the IRA balance.

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.