Monster TAX-FREE Roth Conversions – IRS Notice 2014-54

On September 18, 2014, the IRS released Notice 2014-54, Guidance on Allocation of After-Tax Amounts to Rollovers, which provides details on the taxation of various transactions when a client takes a distribution from their company retirement plan that contains both pre-tax and after-tax funds. Most importantly, the Notice definitively answers one of the most hotly debated questions in the retirement planning community in recent years … “Can a client with pre-tax and after-tax plan money directly roll over (convert) their after-tax money (basis) to a Roth IRA, while also directly rolling over their pretax money to a traditional IRA?” The IRS’ answer in Notice 2014 -54 was an emphatic, “Yes.”