- Plan Sponsors will be required to adopt Roth deferral elections and in-plan Roth rollovers if they are adopting in-plan Roth transfers.
- The plan document must be amended. Plan Sponsors will be allowed to adopt the amendment by the later of the last day of the first plan year in which the amendment is effective or by December 31, 2014, provided the amendment is effective as of the date the plan first operates in accordance with the amendment.
- If the plan elects a money source for which vesting applies, it must specify whether only the vested portion of a partially vested participant account can be included in an in-plan Roth rollover or transfer or whether the participant account must be 100% vested in the source in order to be included.
- Plan Sponsors will need to work with the appropriate parties to update their payroll files and deferral processing to accommodate the Roth money type.
- Plan Sponsors will need to notify participants of the new Roth feature.
- Recordkeepers will not withhold taxes on an in-plan Roth rollover or an in-plan Roth transfer, and the participant will be responsible for making estimated tax payments. In-plan Roth transfers of non-distributable amounts are treated as an eligible rollover so there is no withholding. A participant is responsible for determining whether to increase his or her withholding or makequarterly estimated federal and state (if applicable) tax payments to avoid an underpayment penalty. Participants should consult with their tax advisor prior to initiating an in-plan Roth rollover or transfer.
- Once an in-plan Roth rollover or transfer is processed, it cannot be undone.
- In-plan Roth rollovers and in-plan Roth transfers will be reported as taxable rollovers on Form 1099-R the following January.
- In order to request this transfer, participants will need to complete an in-Plan Roth Rollover/Transfer form obtained through the Plan Sponsor.
- Existing loan balances will not be allowed to be included in an in-plan Roth rollover or in-plan Roth transfer.