Determining amounts to roll over the Roth and amounts to Traditional IRA
I have balance in a old retirement savings plan (401k) dating back to 1998 and which I want to roll over to 1) an existing Traditional IRA and 2) a Roth. The current balance on the account statement segregates the total balance by fund and by contribution types (4 types: ER contributions through 2021, Savings Match Pre-98, Employee PreTax, and Post 86 After Tax). While I can figure out which of these are pre-tax and which are post-tax contributions, how can I tell the portion of the balance in the account that represents the income and which in essence would be pre-tax for purposes of deciding how much to roll over to a Roth and how much to a TIRA?
Permalink Submitted by Alan - IRA critic on Tue, 2024-10-15 18:03
If you do not have a Roth 401k balance, all income is pre tax. Only the amounts of actual after tax contributions should be direct rolled to your Roth IRA in a split rollover with the rest of the balance going to your rollover IRA.
Then, to the extent you wish to pay taxes, you can convert from the rollover IRA to your Roth IRA.
While you could also do a direct rollover of some portion of the pre tax 401k to your Roth IRA and avoid a later Roth conversion, there might be a risk that the plan mishandles the taxable amount of the Roth rollover, while a conversion from your TIRA to your Roth IRA is done by you. But if you are confident that the plan will not misinterpret any paperwork you submit you could request the split rollover. You might specify that you want all the post tax balance plus $x of the pre tax balance rolled to your Roth IRA, and the rest of the pre tax balance to your TIRA.
Note that the split rollover must be done as a single request per Notice 2014-54. You cannot do these on different days.
Permalink Submitted by Michal Bitton on Mon, 2024-10-21 09:25
Thanks for the reply.
Is there a limit of how much I can roll over when I do a split roll over?
Also, how can I determine what the actual after tax contributions were since 1998 while excluding any income that has accumulated since?
Permalink Submitted by Alan - IRA critic on Wed, 2024-10-23 17:31
There is no limit on the amount you could roll over, but the plan may or may not allow for partial rollovers.
Your latest plan statement should show the balance of non Roth after tax contributions in the plan (the post 1986 after tax contributions), and that is normally all that you would roll over to a Roth IRA. The rest of the plan non Roth balance should go to your TIRA account, and this includes any gains on the after tax contributions.