26 U.S.C. § 408A : US Code - Section 408A: Roth IRAs

Search 26 U.S.C. § 408A : US Code - Section 408A: Roth IRAs

(a) General rule
Except as provided in this section, a Roth IRA shall be treated
for purposes of this title in the same manner as an individual
retirement plan.
(b) Roth IRA
For purposes of this title, the term "Roth IRA" means an
individual retirement plan (as defined in section 7701(a)(37))
which is designated (in such manner as the Secretary may prescribe)
at the time of establishment of the plan as a Roth IRA. Such
designation shall be made in such manner as the Secretary may
prescribe.
(c) Treatment of contributions
(1) No deduction allowed
No deduction shall be allowed under section 219 for a
contribution to a Roth IRA.
(2) Contribution limit
The aggregate amount of contributions for any taxable year to
all Roth IRAs maintained for the benefit of an individual shall
not exceed the excess (if any) of -
(A) the maximum amount allowable as a deduction under section
219 with respect to such individual for such taxable year
(computed without regard to subsection (d)(1) or (g) of such
section), over
(B) the aggregate amount of contributions for such taxable
year to all other individual retirement plans (other than Roth
IRAs) maintained for the benefit of the individual.
(3) Limits based on modified adjusted gross income
(A) Dollar limit
The amount determined under paragraph (2) for any taxable
year shall not exceed an amount equal to the amount determined
under paragraph (2)(A) for such taxable year, reduced (but not
below zero) by the amount which bears the same ratio to such
amount as -
(i) the excess of -
(I) the taxpayer's adjusted gross income for such taxable
year, over
(II) the applicable dollar amount, bears to
(ii) $15,000 ($10,000 in the case of a joint return or a
married individual filing a separate return).
The rules of subparagraphs (B) and (C) of section 219(g)(2)
shall apply to any reduction under this subparagraph.
(B) Rollover from IRA
A taxpayer shall not be allowed to make a qualified rollover
contribution to a Roth IRA from an individual retirement plan
other than a Roth IRA during any taxable year if, for the
taxable year of the distribution to which such contribution
relates -
(i) the taxpayer's adjusted gross income exceeds $100,000,
or
(ii) the taxpayer is a married individual filing a separate
return.
(C) Definitions
For purposes of this paragraph -
(i) adjusted gross income shall be determined in the same
manner as under section 219(g)(3), except that -
(I) any amount included in gross income under subsection
(d)(3) shall not be taken into account; and
(II) any amount included in gross income by reason of a
required distribution under a provision described in
paragraph (5) shall not be taken into account for purposes
of subparagraph (B)(i), and
(ii) the applicable dollar amount is -
(I) in the case of a taxpayer filing a joint return,
$150,000,
(II) in the case of any other taxpayer (other than a
married individual filing a separate return), $95,000, and
(III) in the case of a married individual filing a
separate return, zero.
(D) Marital status
Section 219(g)(4) shall apply for purposes of this paragraph.
(4) Contributions permitted after age 70 1/2
Contributions to a Roth IRA may be made even after the
individual for whom the account is maintained has attained age 70
1/2 .
(5) Mandatory distribution rules not to apply before death
Notwithstanding subsections (a)(6) and (b)(3) of section 408
(relating to required distributions), the following provisions
shall not apply to any Roth IRA:
(A) Section 401(a)(9)(A).
(B) The incidental death benefit requirements of section
401(a).
(6) Rollover contributions
(A) In general
No rollover contribution may be made to a Roth IRA unless it
is a qualified rollover contribution.
(B) Coordination with limit
A qualified rollover contribution shall not be taken into
account for purposes of paragraph (2).
(7) Time when contributions made
For purposes of this section, the rule of section 219(f)(3)
shall apply.
(d) Distribution rules
For purposes of this title -
(1) Exclusion
Any qualified distribution from a Roth IRA shall not be
includible in gross income.
(2) Qualified distribution
For purposes of this subsection -
(A) In general
The term "qualified distribution" means any payment or
distribution -
(i) made on or after the date on which the individual
attains age 59 1/2 ,
(ii) made to a beneficiary (or to the estate of the
individual) on or after the death of the individual,
(iii) attributable to the individual's being disabled
(within the meaning of section 72(m)(7)), or
(iv) which is a qualified special purpose distribution.
(B) Distributions within nonexclusion period
A payment or distribution from a Roth IRA shall not be
treated as a qualified distribution under subparagraph (A) if
such payment or distribution is made within the 5-taxable year
period beginning with the first taxable year for which the
individual made a contribution to a Roth IRA (or such
individual's spouse made a contribution to a Roth IRA)
established for such individual.
(C) Distributions of excess contributions and earnings
The term "qualified distribution" shall not include any
distribution of any contribution described in section 408(d)(4)
and any net income allocable to the contribution.
(3) Rollovers from an IRA other than a Roth IRA
(A) In general
Notwithstanding section 408(d)(3), in the case of any
distribution to which this paragraph applies -
(i) there shall be included in gross income any amount
which would be includible were it not part of a qualified
rollover contribution,
(ii) section 72(t) shall not apply, and
(iii) unless the taxpayer elects not to have this clause
apply for any taxable year, any amount required to be
included in gross income for such taxable year by reason of
this paragraph for any distribution before January 1, 1999,
shall be so included ratably over the 4-taxable year period
beginning with such taxable year.
Any election under clause (iii) for any distributions during a
taxable year may not be changed after the due date for such
taxable year.
(B) Distributions to which paragraph applies
This paragraph shall apply to a distribution from an
individual retirement plan (other than a Roth IRA) maintained
for the benefit of an individual which is contributed to a Roth
IRA maintained for the benefit of such individual in a
qualified rollover contribution.
(C) Conversions
The conversion of an individual retirement plan (other than a
Roth IRA) to a Roth IRA shall be treated for purposes of this
paragraph as a distribution to which this paragraph applies.
(D) Additional reporting requirements
Trustees of Roth IRAs, trustees of individual retirement
plans, or both, whichever is appropriate, shall include such
additional information in reports required under section 408(i)
as the Secretary may require to ensure that amounts required to
be included in gross income under subparagraph (A) are so
included.
(E) Special rules for contributions to which 4-year averaging
applies
In the case of a qualified rollover contribution to a Roth
IRA of a distribution to which subparagraph (A)(iii) applied,
the following rules shall apply:
(i) Acceleration of inclusion
(I) In general
The amount required to be included in gross income for
each of the first 3 taxable years in the 4-year period
under subparagraph (A)(iii) shall be increased by the
aggregate distributions from Roth IRAs for such taxable
year which are allocable under paragraph (4) to the portion
of such qualified rollover contribution required to be
included in gross income under subparagraph (A)(i).
(II) Limitation on aggregate amount included
The amount required to be included in gross income for
any taxable year under subparagraph (A)(iii) shall not
exceed the aggregate amount required to be included in
gross income under subparagraph (A)(iii) for all taxable
years in the 4-year period (without regard to subclause
(I)) reduced by amounts included for all preceding taxable
years.
(ii) Death of distributee
(I) In general
If the individual required to include amounts in gross
income under such subparagraph dies before all of such
amounts are included, all remaining amounts shall be
included in gross income for the taxable year which
includes the date of death.
(II) Special rule for surviving spouse
If the spouse of the individual described in subclause
(I) acquires the individual's entire interest in any Roth
IRA to which such qualified rollover contribution is
properly allocable, the spouse may elect to treat the
remaining amounts described in subclause (I) as includible
in the spouse's gross income in the taxable years of the
spouse ending with or within the taxable years of such
individual in which such amounts would otherwise have been
includible. Any such election may not be made or changed
after the due date for the spouse's taxable year which
includes the date of death.
(F) Special rule for applying section 72
(i) In general
If -
(I) any portion of a distribution from a Roth IRA is
properly allocable to a qualified rollover contribution
described in this paragraph; and
(II) such distribution is made within the 5-taxable year
period beginning with the taxable year in which such
contribution was made,
then section 72(t) shall be applied as if such portion were
includible in gross income.
(ii) Limitation
Clause (i) shall apply only to the extent of the amount of
the qualified rollover contribution includible in gross
income under subparagraph (A)(i).
(4) Aggregation and ordering rules
(A) Aggregation rules
Section 408(d)(2) shall be applied separately with respect to
Roth IRAs and other individual retirement plans.
(B) Ordering rules
For purposes of applying this section and section 72 to any
distribution from a Roth IRA, such distribution shall be
treated as made -
(i) from contributions to the extent that the amount of
such distribution, when added to all previous distributions
from the Roth IRA, does not exceed the aggregate
contributions to the Roth IRA; and
(ii) from such contributions in the following order:
(I) Contributions other than qualified rollover
contributions to which paragraph (3) applies.
(II) Qualified rollover contributions to which paragraph
(3) applies on a first-in, first-out basis.
Any distribution allocated to a qualified rollover contribution
under clause (ii)(II) shall be allocated first to the portion
of such contribution required to be included in gross income.
(5) Qualified special purpose distribution
For purposes of this section, the term "qualified special
purpose distribution" means any distribution to which
subparagraph (F) of section 72(t)(2) applies.
(6) Taxpayer may make adjustments before due date
(A) In general
Except as provided by the Secretary, if, on or before the due
date for any taxable year, a taxpayer transfers in a trustee-to-
trustee transfer any contribution to an individual retirement
plan made during such taxable year from such plan to any other
individual retirement plan, then, for purposes of this chapter,
such contribution shall be treated as having been made to the
transferee plan (and not the transferor plan).
(B) Special rules
(i) Transfer of earnings
Subparagraph (A) shall not apply to the transfer of any
contribution unless such transfer is accompanied by any net
income allocable to such contribution.
(ii) No deduction
Subparagraph (A) shall apply to the transfer of any
contribution only to the extent no deduction was allowed with
respect to the contribution to the transferor plan.
(7) Due date
For purposes of this subsection, the due date for any taxable
year is the date prescribed by law (including extensions of time)
for filing the taxpayer's return for such taxable year.
(e) Qualified rollover contribution
For purposes of this section, the term "qualified rollover
contribution" means a rollover contribution to a Roth IRA from
another such account, or from an individual retirement plan, but
only if such rollover contribution meets the requirements of
section 408(d)(3). Such term includes a rollover contribution
described in section 402A(c)(3)(A). For purposes of section
408(d)(3)(B), there shall be disregarded any qualified rollover
contribution from an individual retirement plan (other than a Roth
IRA) to a Roth IRA.
(f) Individual retirement plan
For purposes of this section -
(1) a simplified employee pension or a simple retirement
account may not be designated as a Roth IRA; and
(2) contributions to any such pension or account shall not be
taken into account for purposes of subsection (c)(2)(B).