Rollover terminology
A client of mine requested a rollover from 401(k) after speparting from service. He is 45. Fidelity is processing and is issuing 3 checks. The first if for the pre-tax, the second is for the Roth 401(k), but the third I have never experienced. They are sending a third check that they referred to as Roth pre-tax assets. When I asked the rep what that was she said it was the gains on the Roth 401(k) portion. I assume I can combine the Roth 401(k) (the second check) and the Roth “pre-tax” (the third check) and deposit into my clients Roth IRA?
Permalink Submitted by Alan - IRA critic on Thu, 2018-02-15 17:12
Are these direct rollover checks, or are they made out to client personally? If the latter, there will be 20% withholding on some of the checks, which could explain the third check. Also, if the client does an indirect rollover of a Roth 401k distribution, the third check should be rolled over first because that is how partial rollovers are treated. That reduces taxes on the amount kept as much as possible.