Advisers, clients await guidance on Roth 401(k) conversions

03/13/2013 | BenefitsPro.com

Financial advisers are awaiting guidance from the Internal Revenue Service and Treasury Department before advising clients whether to convert part of a 401(k) plan to a Roth 401(k), says Bob Kaplan of ING. The conversions are taxable, but it's unclear whether the taxes may be paid from the converted money or whether converted funds must be vested, he said. Kaplan also pointed out that Roth conversions are allowed only with 401(k), 403(b) and 457(b) plans. "We can't add a Roth conversion to any other type of plan, like a defined-benefit, cash-balance or profit-sharing type of plan with no 401(k) feature," he said.

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