Almost a week after being offered as a welcome spin-off of the government's last-minute, temporary fix to the "fiscal cliff" fiasco, several firms are warning retirement advisors and plan sponsors to be careful when discussing in-plan Roth 401(k) transfers.
The new American Taxpayer Relief Act of 2012 does indeed remove the traditional stipulations which restricted making an in-plan jump from a traditional 401(k) to the pre-taxed Roth 401(k) – leaving a job, retiring, disability or reaching age 59 1/2 – but experts warn that the Act doesn't necessarily create a one-step solution for every 401(k) participant.
Most importantly, a transfer will now no longer be treated as having violated the rules of the plan types sourced for a Roth conversion – the 401(k), 403(b) and the 457(d).
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