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In Plan 401k Roth Conversions
Old 12-06-2017, 08:44 PM   #1
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Join Date: Mar 2017
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In Plan 401k Roth Conversions

My company has our 401k plan with Vanguard. The plan allows for in-plan conversion from traditional 401k to Roth 401k.

Within the plan, it is set up to show you where all of the contributions have come from. At the moment, I have a substantial amount of after-tax contributions in this plan (like $275,000). Vanguard is able to tell me what the cost basis is for these after-tax contributions ($199,000), with the balance being gains.

What I would like to do is to roll the cost basis from this account into a Roth 401k (backdoor roth). Naturally I would like this to be a non-taxable event.

What Vanguard is telling me (although it seems that they are not exactly sure) is that they are not able to split my after-tax cost basis from the from the gains and, as such, any backdoor Roth conversion would draw down this account proportionally from contributions and from gains. Again, they don't sound all that convinced themselves.

If this is the case, my understanding is that this would then be a taxable event.

Has anyone else had any luck with Vanguard in-plan conversions to Roth 401k such as this without creating a tax problem? If so, has Vanguard been able to split your after-tax contributions from the gains to allow you to roll just the contributions into a backdoor Roth?

Any thoughts would be appreciated.
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