• IRS Announces Retirement Plan Limits (Oct 2011)
• DOL to Withdraw Fiduciary Definition ... (Sept 2011)
• Extension/Alignment of Fee Disclosure Regs (Sept 2011)
• Update on Treatment of Puerto Rico Employees ... (Aug 2011)
• Date Extension for Fee Disclosure Regs (July 2011)
• Extension/Alignment of Dates for Fee Disclosure ... (June 2011)
• DOL Testimony: Proposed Fiduciary Definition (March 2011)
• Extension of 408(b)(2) Fee Disclosure Regs (Feb 2011)
• Senate Passes Small Business Jobs Act (Sept 2010)

Print

Share

Email

Tweet

Senate Passes Small Business Jobs Act (Sept 2010)

Instant Insights (Sept. 16, 2010)

Senate Passes Small Business Jobs Act
On September 16, 2010, the Senate passed the Small Business Jobs Act. The bill will now go to the House for final approval. Democratic leaders in the House have indicated their intent to consider the bill next week.

The primary intent of the bill is to provide tax breaks to small businesses and increase access to small business loans, but as part of the bill’s funding mechanism, provisions have been included that would affect retirement plans. The bill would allow 401(k), 403(b) and governmental 457(b) plans to permit participants to roll their pre-tax account balances into a Roth account. Only participants eligible to receive a distribution (e.g., participants over age 59½) would be able to take advantage of this provision. Effectively, the participant would be taking a distribution and immediately rolling that back into the plan as part of a Roth account. The amount of the rollover would be includible in taxable income except to the extent it is the return of after-tax contributions. If the rollover is made in 2010, the participant can elect to pay the tax in 2011 and 2012.

In order for active participants to take advantage of this the plan must:

• have a Roth source in the plan
• allow in-service withdrawals
• allow rollovers
• elect to have this new provision apply to the plan

The provision would become effective upon final passage and enactment of the bill.

There is some opposition to the Roth conversion provisions in the House, but these provisions have been estimated to raise $5.1 billion in tax revenue over ten years, and are an important source of funding for the broader bill. We will keep you posted as this bill continues to work its way through the legislative process.

IRS Circular 230 Disclosure: This communication was written in connection with the potential promotion or marketing, to the extent permitted by applicable law, of the transaction(s) or matter(s) addressed herein by persons unaffiliated with JPMorgan Chase & Co. However, JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, to the extent this communication contains any discussion of tax matters, such communication is not intended or written to be used, and cannot be used, for the purpose of avoiding tax-related penalties. Any recipient of this communication should seek advice from an independent tax advisor based on the recipient's particular circumstances.