IRA Rollovers: Land Mines in the Safe Harbor
Jan 25, 2010
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By Helen Modly, CFP, CWPA, and Sandra Atkins, CPA/PFS
An obscure IRS notice appears to torpedo the practice of taking a partial distribution of the after-tax dollars from 401(k) plans while doing a direct rollover of the pretax dollars into an IRA. According to a recent IRS notice, any partial direct rollover of plan assets to an IRA or another retirement plan forces the allocation of the after-tax portion to both the funds rolled over and to the funds distributed directly.