In Plan Roth Conversion
401(k) account contains after-tax dollars
plan offers in an IPRC feature
participant wants to convert basis (after tax) dollars only – not the earnings
Question?
Can the earnings be converted (transferred) to another tax deferred source? Or do the earnings have to moved (converted) to a Roth 401(k) account and therefore be subject to (immediately) taxation?
Permalink Submitted by Alan - IRA critic on Thu, 2019-12-05 23:00
The earnings in the after tax sub account must be distributed along with the after tax contributions. The IRS allows those earnings to be distributed to the participant, to a rollover TIRA, and to a Roth IRA in addition to the Roth 401k account per Notice 2014-54. However, the plan may not allow all of those options as plans can be more restrictive than the IRS.