Retirement Rollover Flexibility Act

Section 408(d)(3)(A) of the Internal Revenue Code of 1986 is amended by striking; or at the end of clause (i) and inserting a comma, by striking the period at the end of clause (ii) and inserting, or and by inserting after clause (ii) the following new clause:

(iii) the entire amount received (including money and any other property) is paid in a direct trustee-to-trustee transfer to a designated Roth account (within the meaning of section 402A)—

(I) from an eligible Roth IRA, or

(II) in an automatic portability transaction (as defined in section 4975(f)(12)(A)(i)).

Section 408(d)(3) is amended by adding at the end the following new subparagraph:

For purposes of subparagraph (A)(iii), the term eligible Roth IRA means a Roth IRA which—

(i) is the only Roth IRA (other than a Roth IRA established under section 401(a)(31)(B)(i)) maintained for the benefit of the individual during the taxable year of the taxpayer in which the distribution or payment described in subparagraph (A)(iii) is made, and

(ii) has a balance at the time of the payment or distribution which is not in excess of the amount described in section 401(a)(31)(B)(ii).

Section 402A(c)(3)(B) of the Internal Revenue Code of 1986 is amended by inserting or under section 408(d)(3)(A)(iii) after subparagraph (A).

Section 402A(d) of such Code is amended by adding at the end the following new paragraph:

Notwithstanding section 72, the total amount of any rollover contribution to a designated Roth account under section 408(d)(3)(A)(iii) shall be treated as investment in the contract.

Section 402A(d)(2)(B) of such Code is amended—

(1) by striking earlier in the matter preceding subclause (i) and inserting earliest,

(2) by striking or at the end of clause (i),

(3) by striking the period at the end of clause (ii), and

(4) by adding at the end the following:

(iii) if a rollover contribution was made to such designated Roth account from a Roth IRA under section 408(d)(3)(A)(iii)(II) and the automatic portability provider (as defined in section 4975(f)(12)(A)(ii)) provides the first taxable year to which a contribution was made to the source plan, the first taxable year in which the individual made contributions to the source plan.

(4) For purposes of clause (iii), the term source plan means the eligible retirement plan (as defined in section 401(a)(31)(B)(ii)) from which amounts were transferred to the Roth IRA as described in section 4975(f)(12)(A)(i)(I).

The amendments made by this section shall apply to amounts paid or distributed after the date of the enactment of this Act.