Previously, if you held assets in a 401(k) plan and you were under the age of 59 1/2, you were unable to transfer some or all of your plan assets to a Roth plan under the 401(k) plan. A Roth plan allows for later distributions from the plan to be made without income taxes to the plan participant (which is the opposite treatment of IRAs and other qualified pension plans, which are tax deductible on contribution and taxable when distributions are later made).
Under a provision of the 2012 Taxpayer Relief Act, these transfers are now permitted. Two provisos, however. First, your 401(k) plan must otherwise allow for a Roth account. Second, such a conversion will likely result in current income tax to the participant. Interest persons should consult with their plan administrators and tax advisors before making such a transfer.
Code Section 402A(c)(4)(E)