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§ 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
(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—
(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—
(4)
Contributions permitted after age 701/2
Contributions to a Roth IRA may be made even after the individual for whom the account is maintained has attained age 701/2.
(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:
(d)
Distribution rules
For purposes of this title—
(2)
Qualified distribution
For purposes of this subsection—
(A)
In general
The term “qualified distribution” means any payment or 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.
(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,
(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.
(4)
Aggregation and ordering rules
(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:
(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.
(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).
(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.
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