(1888PressRelease) Joan McCallen, President and CEO of ICMA-RC, commented that "ICMA-RC is excited by the prospect of seeing this legislation signed into law, especially the Roth 457 deferral provision, as it will provide public sector employees with additional retirement savings options."
Washington, DC - The House of Representatives passed the Small Business Jobs Act of 2010, which includes provisions that would allow for Roth contributions to a 457 plan and in-plan Roth conversions for eligible rollover distributions. The Senate previously voted in favor of the Act, so it will now go to President Obama, who is expected to sign it into law. ICMA-RC is monitoring the legislation and plans to offer these features as soon as practical after the Act becomes law. The President will sign the Act on Monday September 27, 2010.
Joan McCallen, President and CEO of ICMA-RC, commented that "ICMA-RC is excited by the prospect of seeing this legislation signed into law, especially the Roth 457 deferral provision, as it will provide public sector employees with additional retirement savings options."
Roth 457 Contributions. This provision would level the playing field for state and local government workers by permitting 457 plans to allow for designated Roth contributions already permitted in 401(k) and 403(b) plans. Designated Roth contributions are taxed as income in the year the contribution is made, but qualified distributions of Roth contributions and associated earnings are completely tax free.
Effective Date: January 1, 2011.
In-Plan Roth Conversions/Rollovers (457, 401(k) and 403(b) plans). This provision would permit 457, 401(k) and 403(b) plans that permit designated Roth contributions to also allow eligible participants to convert eligible pre-tax assets to Roth assets through an in-plan rollover instead of rolling those assets to an external Roth IRA. Currently, participants seeking to perform this type of Roth conversion must roll their retirement plan assets to a Roth IRA, so the provision should allow employers to retain plan assets while providing participants with a benefit they desire.
Effective Date: As of the date of enactment of the Act for 401(k) and 403(b) plans, and no earlier than January 1, 2011 for 457 plans.
When the legislation is signed into law, ICMA-RC intends to offer these features and will be working with clients as they are rolled out.
ICMA-RC is an independent financial services corporation focused on providing retirement plans and related services for more than 920,000 public employees and approximately 9,000 retirement plans. Its mission is to help build retirement security for public employees by providing investment tools, financial education, and other retirement-related services. The corporation also works to ease the administrative responsibility of local governments that offer these benefits to their employees.
For additional information contact:
777 North Capitol Street, NE
Washington, DC 20002
ahannah ( @ ) icmarc dot org
For more information visit http://www.icmarc.org
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