Employer retirement plan issued one check with both pre and post tax contributions

Submitted by John Hill on Mon, 2025-01-13 11:09

I’ve seen two instances lately when an employer plan issued one check that included both pre and post tax contributions. First instance, 401k provider issued check of ~$50k with ~$48k from pre-tax contributions and growth, and ~$2k of post-tax contributions. Provider refuses to issue two separate checks. What options does the client have for depositing into Trad rollover IRA and/or Roth IRA?

Second instance, TSP issued one check to client from QDRO court order of ~$90k. $53k of it was from Roth TSP and remaining amount was from Trad TSP. TSP won’t divide into two checks. Same question as above, what options does the client have in rolling over the check amount into rollover Trad and/or Roth IRAs?

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Permalink Submitted by Alan - IRA critic on Mon, 2025-01-13 12:16

If these were direct rollover checks, perhaps it was not requested correctly, which would require a direct rollover check for the pre tax amount to a traditional IRA and the 2k to a Roth IRA. Depositing the 2k to a TIRA would be a mistake and require pro rating forever. But it might be possible with the IRA custodian to have them split the check to the different IRA types for deposit. If the custodian will not do that the only solution is to return the check to be properly issued as two checks. You did not mention withholding so I assume the check was a direct rollover check, but if instead was made out to the participant, the participant could do 60 day rollovers into the correct accounts but would have to replace the withholding for a complete rollover.
Similar problem, but from different TSP sub accounts and will require 2 1099R forms from the TSP. The TSP mishandled this, but again if the IRA custodian will cooperate and properly split the deposits between TIRA and Roth, it will turn out OK.
In both of these cases, the participant needs to discuss the situation with the IRA custodians to find out what instructions are needed from the participant to split the rollover checks. The rollover checks should not be sent to the custodian until assurance is secured because if the custodian makes an incorrect split or does not split the amounts, it may be difficult to affect a correction.