Can anyone tell me how they are handling IRA's rolling into a retirement plan? Are you requiring any type of documentation detailing that the IRA is qualified or what portion may be after tax? My understanding is that the IRA custodians generally will not sign off on the rollover contribution form indicating all $ are qualified because they do not track after tax, it is the participant's responsibility. Is it true that for an IRA distribution, the entire amount of distribution is recorded in box 2a, and box 2b is checked indicating taxable amount cannot be determined?

In the past, we required the Plan Sponsor of the distributing company to sign off that the funds were coming from a qualified plan, or required a copy of the determination letter from the distributing plan. This doesn't seem possible with IRA custodians.

Since after tax funds cannot be rolled over from an IRA to a qual plan, any amounts rolled over from an IRA will be presumed to be pre tax. It is the participant's responsibility to know what portion is AT funds if custodian does not keep records. It is the participant's tax problem if AT funds are rolled over to a qual plan where it will be taxed again at distribution. The plan can obtain a statement from the participant acknowledging that all of the funds rolled from the IRA are pre tax. The rollover from the IRA can include funds contributed as a 403(b) plan or govt 457(b) plan.

I'm too lazy to look this up right now but what happens if I have one $2,000 IRA -- $1,000 after tax and $1,000 pre-tax. I need $1,000 to pay some bills. If I withdraw $1,000 from my IRA, $500 is taxable and $500 is a return of basis.

Can I roll $1,000 to my employer 401(k) plan and say this is the pre-tax portion of my IRA and then withdraw the remaining $1,000 in my IRA tax-free?

Yes...assuming the 401(k) allows for rollovers from IRAs. …because only the pre-tax amount can be rolled to the QP, therefore, the balance after that would be the post-tax amount.

I agree with MBozek’s comment above.
Since EGTRRA, we have received numerous requests from plans asking us to confirm that the assets from the IRA are rollover eligible. In most cases, such requests are for 403(b) affiliated organizations like PERA. Of course, we are in no position to provide such confirmation since only the IRA owner can tell for sure whether the assets are rollover eligible. When the plan representative refuses to deposit the check without the confirmation from the custodian, we ask the client to provide us with the confirmation in writing….then we write a letter to the plan to the effect that “…the client has indicated in the attached letter that the assets are rollover eligible…or does not include post-tax assets. Please contact the client for any additional information regarding the rollover eligible or pre/post tax status of these assets…”. In effect, we have not confirmed any such information, we merely just attached a noncommittal cover letter to the client’s letter of confirmation. It always works

We have the employee complete a form naming the plan that the funds in the IRA originally came from, etc. and request a copy of the paperwork when the plan distributed the money, the opening IRA statement and a current IRA statement. We think from these that we can be fairly sure of the nature of the rollover being requested.

Can anyone else comment on what type of documentation you require to allow a rollover (either retirement plan or IRA) into your qualified plan, or the qualified plan you administer?

Does anyone accept a certification from the participant claiming the funds are qualified? If so, do you only require the certification, or do you require additional documentation as well.

What are the risks of allowing "ineligible" funds into the plan? EPCRS allows you to distribution the "tainted" money correct?

We have the participant sign a statement indicating what type of vehicle (qualified plan, IRA, 403(b), 457) it came from, certifying that there are no after-tax monies, and acknowledging that the rolled-over funds are subject to plan provisions, such as distribution restrictions, and confirming that if self-directed, it will go into the same mix.



If money is coming from a qualified plan, we get a statement from the distributing plan that it is intended to be qualified, and that it either has a FDL, is a standardized plan (I guess that could be expanded to non-standardized and VS), or doesn't have a FDL because ____________.