Conversion of nondeductible contiburtions to ROTH
Can my after-tax contributions in my employer’s retirement plan be converted to a ROTH IRA tax free?
Can my after-tax contributions in my employer’s retirement plan be converted to a ROTH IRA tax free?
Permalink Submitted by Alan Spross on Sat, 2008-12-06 00:29
Yes, in certain situations.
1) If you have pre 1987 after tax contributions, you should be able to convert them directly to a Roth if you are income eligible (MAGI not over 100,000) and are eligible for distributions.
2) For pre tax amounts, you could first do a direct rollover of the pre tax amount to a TIRA, then if the plan allows another direct rollover, send the after tax remainder to a Roth IRA (again subject to the MAGI limit)
In the plan will not do both direct rollovers, the pre tax one could be done first, and then the after tax amounts distributed to the employee, who could then do a rollover to a Roth IRA. These amounts do NOT go through a TIRA and no Form 8606 applies).
The after tax conversion would be tax free. The income limits go away after 2009.