After-tax 401k conversion to Roth IRA
If upon leaving employment, someone wants to convert the contributions that went into the employer’s after-tax 401k to a Roth IRA, is that still possible if the Modified AGI is higher than would make a typical Roth contribution possible (for example in 2021, $208,000 for married/filing jointly)? Thanks for any input!
Permalink Submitted by Alan - IRA critic on Thu, 2021-03-11 15:58
Yes, the regular Roth IRA contribution income limit does not apply to rollovers like this one. If the person wants to transfer only the after tax contributions out of the plan, they will have to check with the plan to make sure a lump sum distribution is not mandatory. If it is, then they would do a split rollover, sending the after tax balance to their Roth IRA and the pre tax balance in the plan to a traditional IRA. Again, the income limits you refer to are not applicable to rollovers.
Permalink Submitted by David Toberisky on Thu, 2021-03-11 16:03
Thanks very much!