My client requested a full rollover of her California PERS retirement account. She was not vested in the retirement program and had not worked for PERS for 15 years.
When the rollover arrived in the mail there were 2 checks. One was made payable to the new custodian (as we had requested for the entire rollover). The second check was made payable to the client.
We called the PERS retirement system and were informed the the second check represented after tax contributions made by the client to the retirement program, even though the client said she never made any after-tax contributions.
Two questions that I have:
1. Is it possible for a client to contribute after-tax dollars to a state-sponsored retirement system? The PERS rep could not explain how this could have occurred.
2. Can the after tax contribution check be rolled into the client’s Roth IRA?

Thanks for your help