After-tax Account Balance rollover to a Roth IRA
Client is age 70 and just retired. She has a 401k with both pre-tax and after-tax funds.
She has at our firm a Traditional IRA. She has a Roth IRA at another firm that is more than 5 years old.
Will she be able to rollover the After-Tax funds in the 401k into a new Roth IRA at our firm and get the immediate tax free benefits from the new Roth (age 70 and account at least 5 years old)?
Or would she first have to roll over the after-tax funds into her existing Roth IRA at the other firm and then transfer the Roth to the new Roth at our firm.
Permalink Submitted by Alan - IRA critic on Mon, 2021-06-07 19:29
When doing the split rollover, the after tax amounts can be rolled directly into a new Roth IRA at your firm. This news Roth will be immediately qualified and tax free. Once a Roth account becomes qualified, all Roth accounts are also qualified. Client needs to request the split rollover as a single distribution with the pre tax amount going to a TIRA, and the after tax amount going to the new Roth IRA.