Roth 401k Rollover to Roth IRA

Submitted by Charles Duncan on Thu, 2022-06-30 21:06

58 year old client has $1M in Safe Harbor 401k. Has an existing Roth IRA (~$300k) & one traditional IRA w/ zero balance he uses for Back Door Roth every year. Sold his company & so employment terminated but he has employment contract w/ new company for 5 years. Has ~750k in Roth elective deferrals & Roth deferral catchups. Has 150k in Safe Harbor match & 100k in elective deferrals (pre-tax). Can we roll the 750k in Roth deferrals into a Roth IRA & leave the remaining 250k in the plan? Or do we need to first roll the 250k into his new company’s 401k and then when only Roth Deferrals are remaining in the old 401k roll to the Roth? And can we roll the 250k into a traditional IRA or would we then run into pro rata issues? Thanks



Submitted by William Tuttle on Fri, 2022-07-01 03:49

  • If the 401k is continuing under new ownership and the clients fundamental tasks remain the same. This could fall under the “same desk” rule. Causing no separation event that would allow distributing 401k assets.
  • Merger and acquisition effects on 401k plans are quite complicated. Facts and circumstances will determine whether the assets are distributable from the plan.


Submitted by Charles Duncan on Fri, 2022-07-01 19:17

the 401k is not continuing under new ownership.  The corp is required to remain open for three more years so that earn outs can be paid to the corporation so we were thinking the 401k could remain open but with his non-Roth assets being the only money in the 401k (the employees are all rolling to IRA, transferring to the new 401k or taking distributions).  Would the “same desk” rule be avoided if he transferred the non Roth before tax dollars to the acquiring company’s 401k?



Submitted by William Tuttle on Fri, 2022-07-01 21:10

As I said this is complicated and I do not have the expertise. You should contact the 401k plan administrator.



Add new comment

Log in or register to post comments