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Anyone done a in plan Roth 401K conversion?
Old 08-05-2014, 10:29 PM   #1
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Anyone done a in plan Roth 401K conversion?

Specifically at Fidelity.

We are maxing out our 401K and also contributing $20,000 after tax to the 401K which is tracked separately. Every so often we will convert this to a Roth 401K and pay the tax on any gains (just on that money).

Our 401K plan allows this but I am worried about getting a representative that doesn't know what they are doing. I have this panic idea of them accidentally converting $600,000 of our regular 401K into a Roth when all we wanted to convert was the $13,000 of after tax contributions already made this year.

Anyone done this and how did it go?
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Old 08-06-2014, 07:24 AM   #2
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Fidelity can do it no problem. Their CSRs have always been great when I call. I assume that both your 401K and Roth at Fidelity.

I would also suspect that your after tax contributions go to a IRA, not a 401K? Maybe it was a former 401K, and is now a Rollover IRA?
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Old 08-06-2014, 07:34 AM   #3
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In theory, they record such conversations so there would be evidence that you specified that only $x from the Roth 401k is to be converted.
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Old 08-06-2014, 08:06 AM   #4
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It is done (or processing). I did get someone who seemed very knowledgeable at Fidelity. They suggested two options, one is an in plan conversion to a Roth 401K and the other is a in plan direct conversion to a Roth IRA which has advantages via the five year rule for withdrawing contributions and also lets you track the money easier because it is in a separate account.

We are doing the Roth IRA. The total process then is 1) Contribute after tax money to your regular 401K 2) Wait for the market to go down so your earnings are slightly negative 3) Do a in plan conversion of this specific money to a Roth IRA and pay no tax

It is like the ultimate in backdoor Roths.
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Old 08-06-2014, 01:01 PM   #5
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Just did the same thing with Fidelity today. Converted Roth 401k ---> Roth IRA and no fee charged for conversion.
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Old 08-06-2014, 02:58 PM   #6
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Quote:
Originally Posted by retire2020 View Post
Just did the same thing with Fidelity today. Converted Roth 401k ---> Roth IRA and no fee charged for conversion.
This was converting a traditional 401K directly to Roth IRA, but only the after tax portion which had no gains because of the weak market YTD. Hopefully this works the way I think it does and we didn't need to convert first to a Roth 401K then convert from that to a Roth IRA. The guy at fidelity seemed to know what he was doing.
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Old 08-07-2014, 09:11 AM   #7
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Quote:
Originally Posted by Fermion View Post
This was converting a traditional 401K directly to Roth IRA, but only the after tax portion which had no gains because of the weak market YTD. Hopefully this works the way I think it does and we didn't need to convert first to a Roth 401K then convert from that to a Roth IRA. The guy at fidelity seemed to know what he was doing.
You do not need to convert first to Roth 401K. My employer has named after tax contribution account as 'Roth 401K'. As long as it is after tax contribution, you'll have no tax implication other than the gain on investment.
+1 Fidelity reps are pretty knowledgable on the subject.
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Old 08-07-2014, 09:24 AM   #8
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When ever I do business over the phone with a rep I always write down the persons name, date, and time for my file and make sure they repeat my instructions (they usually do anyway) before I finish.

Cheers!
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