Close
Close

IRS issues final Roth distribution regulations

RFP
Tax Hot Topics: Final Roth distribution regsThe IRS has finalized proposed regulations issued in 2014 regarding the characterization of amounts when a distribution includes Roth amounts and goes to multiple destinations. The final regulations (TD 9769) are substantively the same as the proposed regulations. The final regulations state that if disbursements are made from a taxpayer’s designated Roth account to the taxpayer and also to the taxpayer’s Roth IRA or designated Roth account in a retirement plan in a direct rollover, the pretax disbursement amounts will be allocated first to the direct rollover rather than being allocated pro rata to each destination. Also, a taxpayer can direct the allocation of pretax and after-tax amounts that are included in disbursements from a designated Roth account that are directly rolled over to multiple destinations. The regulations apply to distributions from designated Roth accounts made on or after Jan. 1, 2016, or an earlier date chosen by the taxpayer that is on or after Sept. 18, 2014.

Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.