After tax rollover of contributions check payable to participant
Participant wants to do in-service rollover of after tax contributions in their 401k to their Roth IRA. Plan allows for in service withdrawals.
Plan administrator will transfer the earnings associated with the after tax contributions directly to TDAM IRA but send check payable to participant (not their Roth IRA )for the after tax contributions.
Can the participant deposit the check into their Roth IRA (custodian says they can do that ) and successfully complete the rollover (no taxes due on the either of the rollovers)?
If so I assume that the entire transaction should be completed by 12/31 in case law changes disallowing back door Roth IRA conversions?
Thanks as always
Howard
Permalink Submitted by Alan - IRA critic on Thu, 2021-12-09 18:34
Yes, you have this correct. This month may be the last chance to move the after tax 401k balance to a Roth IRA. Participant has 60 days from the date of receipt to roll the after tax balance to the Roth IRA. There will be two separate 1099R forms for these distributions, but the taxable amount will be 0.