After tax (non roth) rollover

Submitted by Richard Nelson on Wed, 2024-01-17 23:22

I’m 67 and retired now. My 401k consisted of 3 types of money:
1) After tax Roth 401k money
2) Pre-tax Traditional 401k money
3) After tax non-Roth money. $14500 ($5000 contributions, $9500.00 associated earnings) Not sure if its pre-1987 or post 1986. Could be a mixture. Neither Principal Life nor the Plan administrator can tell me for sure if this is pre or post 1986/87 money.

Over the last few years, I have directly rolled over my after-tax Roth 401k money to a Roth IRA and the Traditional pretax 401k money to a Traditional IRA. Am now left with the pesky $14,500 of after-tax non-Roth money. Can I simply roll the contributions part into a Roth IRA and the associated earnings into a Traditional IRA? I want to keep things simple even if it means taking a distribution of the entire amount. I vaguely remember around 1987 being given the option to receive thrift plan money out of the 401k. Believe I took it. Thank you.



Submitted by Alan - IRA critic on Thu, 2024-01-18 00:33

Since you are retired, Notice 2014-54 allows you to do a split direct rollover requested as a single distribution where the gains (9500) are directly rolled to a TIRA and the contributions (5000) are directly rolled to a Roth IRA. Some plans however still require the 5000 to be distributed to you personally, and if your plan requires this you can do a 60 day rollover to your Roth IRA.

Submitted by Richard Nelson on Thu, 2024-01-25 19:30

Will be rolling this over from Principal Life to Fidelity Investments. I have a destination TIRA and ROTH already set up at Fidelity. The CSR supervisor I talked to at Pincipal admitted she had never done one of these and that their accuracy rate on rollovers is 9 out of 10. Their rollover forms do describe split distributions but don’t exactly describe what I’m trying to accompish. I was told what boxes to check on the forms but I’m afraid it may create more confusion than anything else. I also am to include an explanatory letter with the forms. The letter will more accurately describe this. I gather their will be two 1099’s issued. Am thinking the TIRA one will be coded G and the Roth one as H . Does that sound correct? Thank you so much sir.

Submitted by Alan - IRA critic on Thu, 2024-01-25 19:58

  • 9 of 10 correct is not very reassuring. Suggest that you state that if they do not understand your instructions and feel more comfortable doing a direct rollover of only the 9500 to your TIRA and sending you a check for the 5000 that they do that. 
  • You will not get an H coded 1099R, as that only applies to distributions that were in a Roth 401k. For the split rollover, you would usually get just one G coded 1099R for the total and would show 0 as taxable. If they do only one direct rollover of the 9500 to TIRA, that would also be on a G coded 1099R, and the 5000 if distributed to you would generate a separate 1099R coded 7 with Box 2a blank.

Submitted by David Mertz on Thu, 2024-01-25 20:11

“9 of 10 correct is not very reassuring.”  I had the same gut reaction. 🙂  That’s like saying, “We screw up 1 out of every 10 rollovers.”

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