Documentación para el mantenimiento correctivo de estaciones base de telefonía.

This section explains how basis is apportioned in the case of a partial rollover or partial Roth conversion of an IRA distribution.

A. IRA-to-nonIRA plan rollovers. When a distribution from a traditional IRA is rolled over

to a QRP or 403(b) plan, the rolled-over money is deemed to come entirely out of the taxable portion of the traditional IRA distribution. § 408(d)(3)(H) (applicable to years after 2001). This rule is necessary because the nontaxable portion of an IRA cannot legally be rolled into a QRP or 403(b) plan. ¶ 2.6.02(H).

As the IRS explains it in IRS Publication 590 (IRAs) (2013 edition, pp. 23-24): “Tax

treatment of a rollover from a traditional IRA to an eligible retirement plan other than an IRA.

Ordinarily, when you have basis in your IRAs, any distribution is considered to include both nontaxable and taxable amounts. Without a special rule, the nontaxable portion of such a distribution could not be rolled over. However, a special rule treats a distribution you roll over into an eligible retirement plan as including only otherwise taxable amounts if the amount you either leave in your

IRAs or do not roll over is at least equal to your basis. The effect of this special rule is to make the

amount in your traditional IRAs that you can roll over to an eligible retirement plan as large as possible.” Emphasis added.

This exception creates the opportunity for a tax-free distribution from a traditional IRA. In the Gibbs Example (¶ 2.2.08(G)), if Gibbs participates in a QRP that accepts rollovers, Gibbs could have all or most of the pretax money in the account transferred directly to the qualified plan. He would certify to the plan that the transfer consisted entirely of pretax money. Rev. Rul. 2014-9, 2014-17 IRB 975 (4/3/14) lays out the procedures for such a direct rollover from a traditional IRA to a qualified plan. Once that transfer is completed, he is left with a “stub” IRA that is wholly or mostly after-tax money, and he can convert it to a Roth IRA with little or no resulting income tax hit.

If using this technique to isolate the after-tax money in an IRA, either for purposes of doing a “free” Roth conversion or just for purposes of getting access to the after-tax money for outside spending or investing, keep in mind that account balances are determined at the END of the calendar year for purposes of applying the cream-in-the-coffee rule (see ¶ 2.2.08(C)). So the participant must be careful not to roll any money INTO an IRA, after he has done his IRA-to-plan rollover, during the same calendar year that he uses this basis-isolating technique.

Dan Example: Dan owns a $500,000 traditional IRA of which $40,000 is after-tax money

(resulting from nondeductible contributions over the years). He is also a participant in a 401(k) plan that accepts rollovers. In 2014, he transmits $460,000 directly from the IRA into the 401(k) plan, certifying to the plan (in accordance with Rev. Rul. 2014-9) that the transferred amount is all pretax money. That rollover carries all the pretax money into the 401(k), leaving only the $40,000 of after- tax money in the IRA. Dan later converts the IRA to a Roth IRA tax-free. (Dan must be careful not to take any distribution from the 401(k) plan that he plans to roll back into an IRA until after the end of the year he does the Roth conversion.)

B. Partial IRA to Roth IRA conversion. Generally, any IRA distribution consists

proportionately of pre- and after-tax money, and the same is true for any transfer (conversion) from a traditional IRA to a Roth IRA. ¶ 2.2.08. If the participant takes a distribution from his IRA, and the distribution contains both pretax and after-tax money, and the participant rolls over (converts) only part of the distribution to a Roth IRA, the rollover would apparently consist of the same proportions of pre- and after-tax money as the distribution itself. See Reg. § 1.408A-4, A-1(b), (c), A-7(a); § 408(d)(1), (2); compare § 408(d)(3)(H). Unlike with the special rules applicable to partial rollovers of QRP distributions (¶ 2.2.05(B)), and to IRA-to-nonIRA plan rollovers (see “A” above), there is no special exception to § 72 applicable to partial IRA-to-IRA (or IRA-to-Roth IRA) rollovers that would cause the pretax money to be deemed rolled first.

The only possible exception to this conclusion arises if the partial IRA distribution occurs in a year in which a minimum distribution is required. Reg. § 1.402(c)-2, A-8, provides that, in the case of a distribution from a qualified plan, where the distribution includes both pre- and after-tax money, the after-tax money is applied first to the RMD for the year. This has the effect of making more of the pretax money eligible for rollover. It is not clear whether this same rule also applies to IRAs.

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Regarding Roth IRAs inherited by the surviving spouse, the following is from ¶ 3.2.03(B):

3.2.03(B) Spousal election for inherited Roth IRA. If the surviving spouse as sole

beneficiary of the deceased participant’s Roth IRA elects to treat the Roth IRA as her own, then “the Roth IRA is treated from that date forward as though it were established for the benefit of the surviving spouse and not the original Roth IRA owner.” Reg. § 1.408A-2, A-4. According to the regulation, this applies for the following purposes:

T The minimum distribution rules. There would be no further RMDs required until

the spouse’s death, because she now holds the account as owner rather than as beneficiary and the lifetime RMD rules do not apply to Roth IRAs (see ¶ 5.2.02(A)).

T Income taxability of distributions. This would mean that the decedent’s basis in

the account (his contributions) would be combined with the surviving spouse’s own basis/contributions to her own Roth IRAs for purposes of applying the Ordering Rules (¶ 5.2.07) to any nonqualified distribution (¶ 5.2.06).

T Early distributions penalty. Once the spouse elects to treat the inherited Roth IRA

as her own, the account ceases to be a “death benefit”; see ¶ 3.2.08.

However, there is one exception to this general rule that the elected Roth IRA becomes “indistinguishable” from any Roth IRA established by the spouse herself: She gets to “keep” the decedent’s years of Roth IRA ownership, if longer than her own, for purposes of computing the Five-Year Period; see ¶ 5.2.05(B).

See also ¶ 3.2.04 below regarding the surviving spouse’s ability to convert an inherited

traditional plan or IRA to a Roth IRA.

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Regarding a Roth conversion by the surviving spouse, from ¶ 3.2.04: