After-Tax 401K Contribution’s Earnings conversion to Roth IRA – Deadline
Hello,
What’s the deadline for the after-Tax 401K contributions conversion to Roth IRA? Is it 12/31 or is it April of the following year, like for contributions?
I assume that my question is only relevant if I choose to convert the earning portion of the after-tax 401K into a Roth IRA. Please correct me if I am wrong.
Thanks!
Permalink Submitted by Alan - IRA critic on Thu, 2018-03-08 16:45
There is no deadline for this direct rollover, but it is reportable in the year of the rollover and you will get a 1099R which must be reported. In other words, your after tax contributions can be made any time but your plan may limit the number of direct rollovers you can do out of the plan. The more often you do these rollovers, the less earnings buildup on the contributions. You would probably then roll the small amount of earnings along with the contributions and pay taxes on the earnings. However, if you were only allowed one rollout per year and had a large earnings accumulation, you could do a split rollover and send the earnings to your TIRA. That would eliminate any taxable income for the two rollovers. In any event April does not apply for reporting the rollover, it is reportable in the tax year of that rollover according to your 1099R.