After-Tax Rollovers to Roth …. But From the Past ?

Submitted by Harry Cotterill on Thu, 2018-09-06 21:13

In 2005 I rolled my employer’s 401K completely over, part to a Fidelity IRA and the after-tax part to a Fidelity brokerage account, this method on their advice. Now, with IRS Notice 2014-54 it appears that not only are after-tax 401K portions rollable to a Roth, but “For distributions made prior to September 18, 2014, taxpayers may generally apply the same reasonable interpretation standard described in the preceding paragraph.” So, I’m wondering if I could today move that original pre-tax amount that went into the brokerage account to my Roth. Any thoughts? Here is a link to that notice: https://www.irs.gov/pub/irs-drop/n-14-54.pdf. What I quoted above is near the very end of the Notice, in the 3rd-from-the-last paragraph of the Notice. Thanks much for any comments!



Submitted by William Tuttle on Thu, 2018-09-06 21:27

  • The sentence you quoted, refers to taxpayers who rolled their after-tax balances to a Roth IRA prior to  September 18, 2014. Those rollovers were retroactively approved.
  • You took a distribution of your after-tax balance and deposited it in your brokerage account. It was not a rollover to a retirement account. That is now just the same as any other after-tax assets and can only be contributed to a Roth IRA subject to the compensation, income and contribution limits.

Submitted by Harry Cotterill on Thu, 2018-09-06 21:34

Thanks much – just wishful thinkin’ I guess.  Distribution, vs Roll.  Much appreciated comment.

Submitted by Alan - IRA critic on Thu, 2018-09-06 22:54

Note that even if you wanted to roll the funds to your Roth IRA back in 2005, it was not allowed then. Direct rollovers from the non Roth portion of an employer plan to a Roth IRA were first made available in 2008, and for 2008 and 2009 the 100k MAGI limit for such rollovers was still in force as well.

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