Mega Backdoor Roth and Other IRAs
Does it matter if a client has other traditional IRAs and does an in-service distribution of after-tax funds from his 401k to his Roth? Do the other traditional IRAs factor in to the taxability of the transaction?
Does it matter if a client has other traditional IRAs and does an in-service distribution of after-tax funds from his 401k to his Roth? Do the other traditional IRAs factor in to the taxability of the transaction?
Permalink Submitted by Alan - IRA critic on Mon, 2020-12-07 20:07
No, other IRAs do not affect the taxation of a Roth rollover from an employer plan because these rollovers are going directly into the Roth IRA. If both the after tax contributions and their earnings are rolled over into the Roth IRA, the 1099R from the 401k plan will include the taxable portion in Box 2a.
Permalink Submitted by IRAQuestion5 on Tue, 2020-12-08 18:01
Thank you!