Update to Innovest's Compliance Bulletin on In-Plan Roth Conversions

Last week we posted a compliance bulletin regarding the in-plan Roth conversion feature for 401(k) and 403(b) plans, which was made available under the Small Business Jobs Act passed by Congress on September 23, 2010. The IRS has since released two pieces of guidance regarding Roth in-plan conversions.

One of the concerns noted in the bulletin was that a waiver had not yet been granted for tax withholding requirements for in-plan Roth conversions. On November 21, the IRS issued an announcement indicating that in-plan Roth conversions are not subject to mandatory withholding. You may view the announcement here.

Additionally, the IRS has issued Notice 2010-84, providing further guidance regarding the timing of the required amendments for plans adopting the in-plan Roth conversion feature. Click here to read about this recent guidance.