After Tax 401k rollover

Submitted by Eric Drossner on Wed, 2021-01-13 17:28

A client has pre-tax and after-tax contributions in his 401k Plan. He has retired and wants to roll the entire balance to an IRA. Am I correct that he would roll the pre-tax source, along with the earnings in the after-tax source to a Traditional IRA, and only the after-tax contribution amount goes into a Roth IRA?



Submitted by drex neumann on Wed, 2021-01-13 18:47

That is way I understand it. It is a good idea and if you company lets you I would recommend doing every year  when you can and not wait till retirement. Also the Roth IRA has to be open 5 years along with 59.5 age so go ahead and open a Roth IRA to get the clock started and running.

Submitted by Alan - IRA critic on Wed, 2021-01-13 20:25

These two rollovers must be requested at the same time by asking that the entire pre tax plan balance be directly rolled to a TIRA and the after tax amounts to a Roth IRA. This is authorized by IRS Notice 2014-54. If the person also has a Roth 401k balance, that direct rollover to a Roth IRA can be ordered separately.

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