Roll-In Deductible Traditional IRA to 401K

I have a Traditional IRA that was not from a 401K rollover. Can I roll it into my current 401K?



If the plan will accept it. Remember if you have any basis in your IRA from non deductible contributions you cannot roll the basis into the 401k. You may have to certify to the 401k that no basis is included in the rollover if the plan even accepts IRA rollovers.



Thanks very much for the quick reply! My plan will accept it. The documents don’t mention anything about the basis. Searching the internet, I haven’t come across any good information about the basis. Why is the basis not allowed to be rolled into the 401K? Oh, I just noticed that you said “non-deductible”! If the IRA is a tax-deductable account, then I can roll it all in?

I am rolling this deductble IRA in to my 401K to simplify my conversion of a separate non-deductible to a ROTH later. Am I handling this right?



  • The tax code explicitly prohibits the rollover to a 401(k) of after-tax amounts from an IRA (the nondeductible contributions).
  • All of your traditional IRA accounts are considered in aggregate, so your IRA basis is not isolated in any particular IRA account.  However, rollovers from a traditional IRA to a 401(k) are deemed to come first from the pre-tax amounts in the aggregate of your IRA accounts.  For you to avoid rolling nondeductible contributions into the 401(k), you must make sure that the amount that remains in your traditional IRAs at the end of the year plus any other amounts distributed and amounts converted to a Roth IRA during the year do not exceed the amount of basis that you had in nondeductible contributions.  This can be ensured by first doing a Roth conversion of the entire nondeductible basis amount (or more), then, within the same year rolling over the rest of your traditional IRAs to the 401(k).  Basically, to accomplish your intent you must ensure that your Roth conversion amount equals or exceeds your basis and nothing remains in traditional IRAs at the end of the year.

 



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