Generally, a rollover is a tax-free distribution to you from a previous retirement plan or IRA that you transfer to another retirement plan or IRA. A rollover does not count towards the annual IRA contribution limit and it is not a deductible contribution.
The Roth NYCE IRA will accept rollovers from the City's Roth 401(k) Plan, previous Roth 401(k) plans and Roth IRAs.
A rollover to the NYCE Roth IRA must be completed within 60 days after distribution from a previous Roth IRA to the employee. Only one Roth IRA rollover is permitted every 12 months. Roth IRA assets may not be rolled over to other types of IRAs, e.g., Traditional, Simple IRA.
A rollover of a Qualified Distribution from a previous Roth IRA to the Roth NYCE IRA would be treated as tax-free.
A rollover of a Qualified Distribution from the City’s Roth 401(k) Plan or another Roth 401(k) Plan to the Roth NYCE IRA would be treated as tax-free. However, the investment return on that amount earned in the Roth NYCE IRA would be subject to applicable taxes and penalties unless deemed a Qualified Distribution upon withdrawal.
In the case of a rollover of a non-Qualified Distribution from the City’s 401(k) Roth Plan to the Roth NYCE IRA, the period that the rolled-over funds were in the 401(k) Roth Plan does NOT count towards the 5-taxable-year period for determining a Qualified Distribution from the NYCE Roth IRA. The portion of the distribution that constitutes Roth 401(k) non-taxable contributions would be treated as tax free in the Roth IRA.
The following are amounts that are not eligible for rollover to the Roth NYCE IRA:
1. Excess elective deferrals pursuant to IRC section 415;
2. Loans that are treated as deemed distributions pursuant to IRC section 72(p).
A Roth IRA conversion consists of amounts rolled over, transferred, or considered transferred from a non-Roth IRA, such as the Traditional NYCE IRA or traditional retail IRAs. Assets distributed from a non-Roth IRA will be reported to the IRS as a taxable distribution, subject to applicable income tax. Conversions to the Roth NYCE IRA will not be subject to penalties for premature distributions. Converting money to the Roth NYCE IRA enables you to avoid future income taxes on any subsequent Roth NYCE IRA Qualified Distributions.
Starting in 2010, the tax law limiting a Roth conversion to taxpayers with adjusted gross income of $100,000 or less is being eliminated. Effective in 2010, taxpayers with adjusted gross income of more than $100,000 will be allowed to convert to a Roth IRA. This change applies to all years beyond 2010 and the income taxes due on the 2010 conversion can be spread over two years.
Please consult a tax advisor prior to making a conversion to a Roth IRA.
After establishing a Roth NYCE IRA, rolling over assets from a previous Roth 401(k) plan or Roth IRA is simple:
Roth NYCE IRA
FBO: <your full name and last four digits of your Social Security Number>
Direct them to mail the check to:
P.O. Box 392057
Pittsburg, PA 15251-9057
Upon receipt of the Incoming Rollover Form and the funds, you will receive a NYCE IRA confirmation letter. The assets will be invested in accordance with the investment allocation selected at the time you set up your Roth NYCE IRA account. See Selecting Your Investments to learn more about your available investment options.