Safe Harbor 401k Contributions Rolled over to a Roth IRA?
I have a client with Roth 401k. They have always made Roth contributions and not Traditional.
Also, they have had additional Safe Harbor contributions made to their account. Now they are leaving the company and want to roll the assets to their Roth IRA.
Are the Safe Harbor contributions also considered part of the Roth, and can they roll the entire amount to their personal Roth IRA?
Terry
Permalink Submitted by Alan - IRA critic on Mon, 2015-01-26 19:17
The safe harbor matching contributions were made to a pre tax account in the 401k, not to the designated Roth account. The designated Roth balance would be directly rolled into their Roth IRA, but if the pre tax balance was also rolled to the Roth IRA, that portion would be taxable. To avoid current taxes, the pre tax account must be rolled to a traditional IRA account.