The University has expanded the options available in the UC Retirement System by permitting rollover of qualified funds into a Roth IRA.

About the Roth IRA

Unlike a traditional IRA, contributions to a Roth IRA are not tax-deferred - the taxable portion of the rollover distribution will be 100 percent taxable in the year of the distribution, with the exception to allow the tax to be spread over two years beginning in 2010. Once the rollover is complete, withdrawals from a Roth IRA are generally tax-free.

An advantage of the Roth IRA over a traditional IRA is that there are fewer withdrawal restrictions and requirements. Transactions inside the Roth IRA account (including capital gains, dividends, and interest) do not incur a current tax liability. Withdrawals of rollover contributions are generally tax free when the account has been opened for at least 5 years.

UC provisions for Roth IRA rollovers

Funds eligible for rollover to a Roth IRA include distributions from the DC Plan, 403(b) Plan, 457(b) Plan, UCRP lump-sum cashouts and the distributions from the UCRP Capital Accumulation Payment (CAP) accounts (monthly UCRP retirement/disability, preretirement survivor and postretirement income are not eligible). The option to roll over to a Roth IRA is available both to UCRS members and spouse beneficiaries.

For eligible distributions before January 1, 2010, UCRS member and spouse beneficiaries can roll over to a Roth IRA if their adjusted gross income does not exceed $100,000 for the taxable year of the distribution, and they are not filing a separate tax return, if married. The adjusted gross income limit will not apply after December 31, 2009.

Members are encouraged to consult a financial advisor before making any decisions.

Further information and election process

Detailed Roth IRA tax information is available in the Special Tax Notice for Plan Distributions available on the At Your Service website under "Forms and Publications."

Additional information will be provided on the Fidelity Retirement Services website, the At Your Service website, and announced locally as permanent Roth IRA rollover election procedures are finalized.