After tax and Roth check incoming; custodian did not offer direct rollover

Submitted by Tom Belding on Sat, 2022-10-08 22:29

A client’s recently deceased husband had a large amount of pre-tax $$ in one of his former employer’s 401(k)s, which is being directly rolled over. He has a smaller amount in after-tax and Roth $ in the 401(k). The custodian is not offering a direct rollover option for the latter; she expects to receive it as a personal check.

Can we deposit this with the new custodian for deposit to the widow’s Roth, assuming an immediate turnaround? If so, what particulars should we keep in mind?



Submitted by William Tuttle on Sun, 2022-10-09 05:03

  • A custodian must offer a direct rollover, but does not have to offer two.
  • However, if they do not over two they must offer a distribution of the second one.
  • Taxable distributions are subject to mandatory 20% withhold. That is why the pre-tax should be done as a direct rollover and the after-tax as a distribution.
  • A 60-day rollover of the after-tax distribution can be made to a Roth IRA.
  • It is up to the Roth IRA custodian whether they will accept a deposit of a third party check. They may or may not require depositing the check in a personal account and a new check or ACH transfer performed.

Add new comment

Log in or register to post comments