After Tax 401k contributions

I have a client that has $37k in after tax contributions and $520k in pre-tax. Is the strategy to get the money into a Roth IRA for the after-tax money still apply for 2013 – i.e. request a distribution of the entire balance, mandatorily withhold the 20%, and then fund an IRA rollover with the pre-tax value and then the Roth IRA with the after-tax value?

Does the fact that she already have an IRA rollover of $100k affect this strategy?

Also, how long after you fund the Rollover IRA before you can then the Roth IRA?



Yes, this is still the safest way to isolate basis to the Roth IRA rollover. Existence of a rollover IRA has no affect on the strategy and client could add to the existing rollover IRA with the pre tax portion of the distribution. The rollover of after tax funds to the Roth IRA should be done as soon as the pre tax amount has been deposited to the TIRA. The 20% withholding should be replaced as needed to complete the rollovers.

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