[Federal Register Volume 70, Number 161 (Monday, August 22, 2005)]
[Proposed Rules]
[Pages 48924-48925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-16404]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-122857-05]
RIN 1545-BE65


Converting an IRA Annuity to a Roth IRA

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations under 
section 408A of the Internal Revenue Code (Code). The temporary 
regulations provide guidance concerning the tax consequences of 
converting a non-Roth IRA annuity to a Roth IRA. The temporary 
regulations affect individuals establishing Roth IRAs, beneficiaries 
under Roth IRAs, and trustees, custodians and issuers of Roth IRAs. The 
text of those temporary regulations also serves as the text of these 
proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by November 21, 2005.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-122857-05), room 
5203, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
122857-05), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC. Alternatively, taxpayers may submit 
comments electronically via the IRS Internet site at http://www.irs.gov/regs or the Federal eRulemaking Portal at http://www.regulations.gov (IRS-REG-122857-05).

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Cathy A. 
Vohs, 202-622-6060; concerning submissions and requests for a public 
hearing, contact Treena Garrett, 202-622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    Temporary regulations in the Rules and Regulations portion of this 
issue of the Federal Register amend the Income Tax Regulations (26 CFR 
part 1) relating to section 408A. The temporary regulations (Sec.  
1.408A-4T) contain rules concerning the tax consequences of converting 
a traditional IRA annuity to a Roth IRA. The text of those temporary 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the temporary and 
proposed regulations.

Applicability Date

    These regulations are proposed to be applicable to any Roth IRA 
conversion where an annuity contract is distributed or treated as 
distributed from a traditional IRA on or after August 19, 2005. No 
implication is intended concerning whether or not a rule to be adopted 
in these regulations is applicable law for taxable years ending before 
that date.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866. Therefore, a regulatory assessment is not required. It also has 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these proposed regulations, and, 
because these regulations do not impose a collection of information on 
small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) 
does not apply. Pursuant to section 7805(f) of the Code, these proposed 
regulations will be submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The IRS and Treasury Department request comments on the clarity of 
the proposed rules and how they can be made easier to understand. 
Comments are specifically requested regarding the proposed additional 
guidance discussed in the preamble to the Temporary Regulations under 
section 408A (i.e., Sec.  1.408A-4T). The IRS and Treasury Department 
also request comments regarding whether the method used to calculate 
the fair market value of an annuity contract that is converted to a 
Roth IRA should also apply for purposes of determining the fair market 
value of an annuity contact under sections 408(e) and 401(a)(9). All 
comments will be available for public inspection and copying. A public 
hearing will be scheduled if requested in writing by any person that 
timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the public hearing will be 
published in the Federal Register.

Drafting Information

    The principal author of these proposed regulations is Cathy A. Vohs 
of the Office of the Division Counsel/Associate Chief Counsel (Tax 
Exempt and Government Entities). However, other personnel from the IRS 
and Treasury Department participated in the development of these 
regulations.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

    Paragraph 1. The authority citation for Part 1 continues to read, 
in part, as follows:

    Authority: 26 U.S.C. 7805 * * *
    Sec.  1.408A-4 also issued under 26 U.S.C. 408A * * *

    Par. 2. Section 1.408A-4 is amended by adding, in numerical order, 
Q-14 and A-14, to read as follows:

[[Page 48925]]

Sec.  1.408A-4  Converting amounts to Roth IRAs.

* * * * *
    Q-14. [The text of proposed regulation Sec. 1.408A-4, Q-14 is the 
same as the text of Sec. 1.408A-4T, Q-14 published elsewhere in this 
issue of the Federal Register].
    Q-14. [The text of proposed regulation Sec.  1.408A-4, Q-14 and A-
14 is the same as the text of Sec.  1.408A-4T, Q-14 and A-14 published 
elsewhere in this issue of the Federal Register].

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 05-16404 Filed 8-19-05; 8:45 am]
BILLING CODE 4830-01-P