In-Plan Roth Conversion Form - Oregon Savings Growth Plan Page 2
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4In-Plan Roth Conversions –
Frequently Asked Questions
hoW aRe in-plan Roth conveRsions taxed?
You generally include the taxable amount of an in-plan Roth conversion in your gross income for the tax year in which you convert it.
The taxable amount of an in-plan Roth conversion is the amount that would be includible in a participant’s gross income if the con-
version were made to a Roth IRA.
Plan sponsors shouldn’t withhold taxes from direct conversions to designated Roth accounts, but employees who make in-plan Roth
conversions may need to increase their withholding or make estimated tax payments to avoid an underpayment penalty.
do any additional taxes oR penalties apply to in-plan Roth conveRsions?
Distributions from your OSGP account are not subject to the 10% additional tax on early distributions, nor are they subject to the
special recapture rule described below, unless the payment is from a separate account within the plan holding rollover contributions
that were made to the Plan from a tax-qualified plan, a section 403(b) plan, or an IRA.
Amounts distributed from a separate account holding rollover contributions that were made to the plan from a tax-qualified plan, a
section 403(b) plan, or an IRA will be subject to the 10% additional tax on early distributions, unless an exception applies.
If the in-plan Roth conversion contains amounts from a separate account holding rollover contributions that were made to the plan
from a tax-qualified plan, a section 403(b) plan, or an IRA, the 10% additional tax on early distributions will not apply (unless you
take the amount out of the designated Roth account within the 5-year period that begins on January 1 of the year of the conver-
sion). With respect to this special recapture rule, the 5-taxable-year period begins January 1 of the year of the in-plan Roth con-
version and ends on December 31 of the fifth year. This special recapture rule does not apply when you roll over the distribution to
another designated Roth account or to your Roth IRA, but does apply to a subsequent distribution from the rolled over account or
IRA within the 5-taxable-year period, unless an exception to this tax applies.
must my plan pRovide me notice of the in-plan Roth conveRsion featuRe?
If the in-plan Roth conversion is of an amount that could be distributed to you under the plan, then the plan must include
a description of it in the written explanation (402(f) Notice) that it gives to participants who receive an eligible conversion
distribution. However, no 402(f) Notice is required for an in-plan Roth conversion of an amount that couldn’t be distributed
at the time of the conversion.
hoW does my plan deteRmine the amount of a distRibution allocable to my
in-plan Roth conveRsion?
A distribution attributed to an in-plan Roth conversion is treated as first coming from your oldest in-plan Roth conversion
(first-in-first-out basis) and is allocated first to the taxable amount of that conversion.
Additional information can be found at:
800 Summer Street N.E., Suite 200, Salem, OR 97301 / 503.378.3730 (Phone) / 503.378.5888 (Fax) /
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