Pursuant to Section 17501 of the Revenue and Taxation Code, Section 408A of the Internal Revenue Code is applicable for California personal income tax purposes. Consequently, Section 408A of the Internal Revenue Code, for California purposes, does not include amendments enacted in 1998. The contribution to the Roth IRA will be treated as an excess contribution, subject to the federal excise tax on excess contributions. The contribution to the Roth IRA is ignored for federal tax purposes. An eligible rollover contribution from a traditional IRA to another traditional IRA is not includible in gross income in the year of the rollover contribution.
Federal law permits a taxpayer to elect out of the ratable inclusion.
California law does not. In all other circumstances, a traditional IRA effectively designated, as a Roth IRA for federal tax purposes, shall be a Roth IRA for California purposes. The principal author of this ruling is Patrick J. Kusiak of the Franchise Tax Board, Legal Branch. For further information regarding this ruling, contact Mr. Kusiak at the Franchise Tax Board, Legal Branch, P.O. Box 1720, Rancho Cordova, CA 95741-1720.