Conversion of Pre-Tax Employee $ in 401k to Roth 401k
Hello.
Can a person convert their Pre-tax Employee $ in their 401k to the Roth option in their 401k?
Hello.
Can a person convert their Pre-tax Employee $ in their 401k to the Roth option in their 401k?
Permalink Submitted by Alan - IRA critic on Fri, 2019-03-08 16:06
Yes, if the plan permits. These are called “in plan Roth rollovers” or IRRs. Offering IRRs requires a plan to adopt a much more complex accounting for the components of the Roth 401k, including a separate accounting for the IRR funds, the breakdown of which funds are distributable while still in service (ODAs) or otherwise not distributable (ONAs). Some very large plans such as the TSP have yet to offer IRRs, presumably due to changes necessary to their plan accounting platform. Of course, the plan must already have adopted a Roth 401k facility, but many plans with a Roth 401k still have not adopted IRRs. An IRR of pre tax funds is of course taxable and has a 5 year holding period to avoid penalty, just like a Roth IRA conversion.