After Tax 401(k) Contribution Use for Roth IRA
I have an after tax contribution portion in my 401(k). I left my job and can now roll the 401(k) out. The question I have is can I take the after tax portion and put it into an existing Roth IRA? I have read through other after tax questions on this board but did not get clarity on this question. The brokerage holding the 401(k) said that I could do this and my tax preparer said that I can’t. Can anyone shed more light on this subject?
Thanks, Kathy
Permalink Submitted by Alan Spross on Tue, 2011-06-28 22:58
There is no final clarity because the IRS has left several details hanging. Basically, the IRS has ruled that all funds must be pro rated to each type of IRA. However, there is a risk free away around this if you do indirect rollovers, ie YOU receive the funds and then do the rollovers yourself. See strategy #3 on the Fairmark link:
http://www.irahelp.com/forum/viewtopic.php?f=1&t=5663&start=0&hilit=Sear…