Internal Revenue Bulletin:  2006-20 

May 15, 2006 

Appendix
 
Sample Plan Amendment
 
Article . ROTH ELECTIVE DEFERRALS
 
Section 1. General Application.
1.1 This article will apply to contributions beginning with the effective date specified in the adoption agreement but in no event before the first day of the first taxable year beginning on or after January 1, 2006.
1.2 As of the effective date under section 1.1, the plan will accept Roth elective deferrals made on behalf of participants. A participant’s Roth elective deferrals will be allocated to a separate account maintained for such deferrals as described in section 2.
1.3 Unless specifically stated otherwise, Roth elective deferrals will be treated as elective deferrals for all purposes under the plan.
Section 2. Separate Accounting
2.1 Contributions and withdrawals of Roth elective deferrals will be credited and debited to the Roth elective deferral account maintained for each participant.
2.2 The plan will maintain a record of the amount of Roth elective deferrals in each participant’s account.
2.3 Gains, losses, and other credits or charges must be separately allocated on a reasonable and consistent basis to each participant’s Roth elective deferral account and the participant’s other accounts under the plan.
2.4 No contributions other than Roth elective deferrals and properly attributable earnings will be credited to each participant’s Roth elective deferral account.
Section 3. Direct Rollovers
3.1 Notwithstanding section , a direct rollover of a distribution from a Roth elective deferral account under the plan will only be made to another Roth elective deferral account under an applicable retirement plan described in § 402A(e)(1) or to a Roth IRA described in § 408A, and only to the extent the rollover is permitted under the rules of § 402(c).
3.2 Notwithstanding section , unless otherwise provided by the employer in the adoption agreement, the plan will accept a rollover contribution to a Roth elective deferral account only if it is a direct rollover from another Roth elective deferral account under an applicable retirement plan described in § 402A(e)(1) and only to the extent the rollover is permitted under the rules of § 402(c).
3.3 The plan will not provide for a direct rollover (including an automatic rollover) for distributions from a participant’s Roth elective deferral account if the amount of the distributions that are eligible rollover distributions are reasonably expected to total less than $200 during a year. In addition, any distribution from a participant’s Roth elective deferral account is not taken into account in determining whether distributions from a participant’s other accounts are reasonably expected to total less than $200 during a year. However, eligible rollover distributions from a participant’s Roth elective deferral account are taken into account in determining whether the total amount of the participant’s account balances under the plan exceeds $1,000 for purposes of mandatory distributions from the plan.
3.4 The provisions of the plan that allow a participant to elect a direct rollover of only a portion of an eligible rollover distribution but only if the amount rolled over is at least $500 is applied by treating any amount distributed from the participant’s Roth elective deferral account as a separate distribution from any amount distributed from the participant’s other accounts in the plan, even if the amounts are distributed at the same time.
Section 4. Correction of Excess Contributions
4.1 In the case of a distribution of excess contributions, a highly compensated employee may designate the extent to which the excess amount is composed of pre-tax elective deferrals and Roth elective deferrals but only to the extent such types of deferrals were made for the year.
4.2 If the highly compensated employee does not designate which type of elective deferrals are to be distributed, the plan will distribute pre-tax elective deferrals first.
Section 5. Definition
5.1 Roth Elective Deferrals. A Roth elective deferral is an elective deferral that is:

(a) Designated irrevocably by the participant at the time of the cash or deferred election as a Roth elective deferral that is being made in lieu of all or a portion of the pre-tax elective deferrals the participant is otherwise eligible to make under the plan; and

(b) Treated by the employer as includible in the participant’s income at the time the participant would have received that amount in cash if the participant had not made a cash or deferred election.

(Adoption Agreement Provisions)
Article , Roth Elective Deferrals: (Check and complete, if applicable.)
shall apply to contributions after January 1, 2006.
shall apply to contributions after . (Enter a date later than January 1, 2006.)
(Note: If neither option is chosen, the amendment will not be effective even if the amendment is signed and dated.)
   
Section , Direct Rollovers: (Check, if applicable.)
The plan:
will not
accept a direct rollover from another Roth elective deferral account under an applicable retirement plan as described in § 402A(e)(1).
(Note: The default position is that the plan will accept a direct rollover of Roth elective deferrals from another Roth elective deferral account. The default position will apply unless this option is checked.)
   
   
  Employer’s signature and date

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