IRA Rollover into 401k

Usually it is more common to see a 401k rollover into an IRA. However, occasionally, there are needs for an IRA rollover into a 401k or other qualified retirement plans.

This can be done. But the rules depend on the accepting retirement plan.

Starting in 2002, an IRA retirement plan owner can roll over, tax free, a distribution from an IRA into a qualified plan, 401k,and other retirement plans including a section 457 plan and a tax-sheltered annuity (section 403b plan).

The part of the IRA distribution that can be rolled over is the part that would otherwise be taxable (nondeductible IRA contributions can not be rolled over).

The accepting qualified retirement plan may, but are not required to, accept an IRA rollover. Rules applicable to other IRA rollovers, such as the 60-day time limit, apply.

The 60 day limit for IRA Rollover

If the IRA rollover is not completed within 60 days, then the amount of the IRA rollover that are not rolled over within 60 days do not qualify for the tax free IRA rollover treatment.

That IRA rollover amount must be treated as a taxable distribution from the IRA rollover. The amount of that IRA rollover is taxable in the year distributed, even if the 60-day period expires in the next year.

There may also be a 10% tax on early IRA rollover distributions. Any contribution received by an IRA made more than 60 days after the distribution (a "failed rollover") is treated as a regular contribution (or an excess contribution if in excess of the limitations on regular contributions for that year) and is not an IRA rollover contribution.