Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Rolling Over After Tax 401k Contributions
Old 06-29-2015, 03:44 PM   #1
Recycles dryer sheets
 
Join Date: Sep 2010
Posts: 233
Rolling Over After Tax 401k Contributions

I am going to roll over my 401k into an IRA, putting the after tax contributions into a Roth and the rest in a tIRA. DH when he retired in in 2006 just put all his 401k in a tIRA. Anyone know if he can put the after tax contributions into a Roth now? I found the following on the IRS site that made it sound like you could:

Transition rules
Taxpayers can use the new rule for distributions on and after September 18, 2014. For distributions
prior to September 18, 2014, taxpayers can also use the new rule, except for distributions from
designated Roth accounts.


__________________

__________________
Corporate ORphan is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-29-2015, 04:43 PM   #2
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 882
I did this in December, 2013. I am (was) retired -- it wasn't an in-service rollover. The IRS permits it. The key is to find out if your 401(k) administrator can will do it.
__________________

__________________
jebmke is offline   Reply With Quote
Old 06-29-2015, 05:00 PM   #3
Full time employment: Posting here.
 
Join Date: Mar 2013
Location: Coronado
Posts: 509
If he has a commingled tIRA now, with both pre- and post-tax funds in it, then it's my understanding that he cannot convert only the post-tax funds to a Roth. However much he moves will be allocated proportionally. So he would have to pay tax on whatever portion of the conversion can be attributed to pre-tax contributions and gains.
__________________
cathy63 is offline   Reply With Quote
Old 06-29-2015, 05:13 PM   #4
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,132
Quote:
Originally Posted by cathy63 View Post
If he has a commingled tIRA now, with both pre- and post-tax funds in it, then it's my understanding that he cannot convert only the post-tax funds to a Roth. However much he moves will be allocated proportionally. So he would have to pay tax on whatever portion of the conversion can be attributed to pre-tax contributions and gains.
This is my understanding also. Even if the after tax money was in a separate IRA then converting that IRA to a ROTH would be taxed in proportion to the sum of all his IRA's.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is online now   Reply With Quote
Old 06-29-2015, 05:56 PM   #5
Recycles dryer sheets
 
Join Date: Jun 2014
Posts: 96
I wanted to do this myself. There are supposed to be techniques to do this. Search for 'isolating basis'. For example:
Isolating IRA Basis - Fairmark.com Fairmark.com

You need an employee plan for this and the plan has to accept rollovers from the type of IRA you have. Mine didn't allow this.
So lots of road blocks and you will have to check if the rules have changed.
__________________
Neill is offline   Reply With Quote
Old 06-29-2015, 10:35 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
I've started rolling DW's combined 401k/Roth 401k into a tIRA and Roth IRA. Her company/401k admin wouldn't separate the pre- and post-tax funds unless we rolled over the entire account. I didn't want to convert it all to cash in order to do that. I'm converting about 10% at a time so that the rest can stay invested.

I did my partial conversion all into a Roth IRA. That keeps the post-tax money safe, but the rest is taxable just like a tIRA to Roth IRA conversion. I'll recharacterize most or all of the taxable portion into a tIRA before tax time next year. So everything ends up in the right place, no taxes are due, and everything fits into normal procedures. That seemed much easier to do than placing it all in a tIRA and then try to recharacterize or transfer some of that into a Roth tax-free. But I haven't done the recharacterization step yet, so that part is untested. If it screws up somehow I've just done a premature Roth conversion. We're doing Roth conversions already, so no real impact there for me.
__________________
Animorph is offline   Reply With Quote
Old 06-30-2015, 07:37 AM   #7
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 882
Quote:
Originally Posted by cathy63 View Post
If he has a commingled tIRA now, with both pre- and post-tax funds in it, then it's my understanding that he cannot convert only the post-tax funds to a Roth. However much he moves will be allocated proportionally. So he would have to pay tax on whatever portion of the conversion can be attributed to pre-tax contributions and gains.
I think OP is talking about a 401(k) roll, not an attempt to isolate the basis in an existing IRA.

If he has a mixed IRA (taxable and basis), the only way I know of to isolate the basis is to roll the IRA into the 401(k) and then roll the basis to a ROTH and the pre-tax to a Tira. Not all 401(k) plans will accept inbound rolls.
__________________
jebmke is offline   Reply With Quote
Old 06-30-2015, 08:45 AM   #8
Full time employment: Posting here.
 
Join Date: Mar 2013
Location: Coronado
Posts: 509
Quote:
Originally Posted by jebmke View Post
I think OP is talking about a 401(k) roll, not an attempt to isolate the basis in an existing IRA.

If he has a mixed IRA (taxable and basis), the only way I know of to isolate the basis is to roll the IRA into the 401(k) and then roll the basis to a ROTH and the pre-tax to a Tira. Not all 401(k) plans will accept inbound rolls.
Could be. I assumed that this statement/question from the OP meant that the 401(k) was already rolled over years ago and now they want to separate pre- and post-tax $ that are already in a tIRA: "DH when he retired in in 2006 just put all his 401k in a tIRA. Anyone know if he can put the after tax contributions into a Roth now?"
__________________
cathy63 is offline   Reply With Quote
Old 06-30-2015, 08:49 AM   #9
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 1,712
IF DH does not have access to a 401k that accepts incoming rollovers from traditional IRAs of tax-deferred funds, then he could consider opening a Solo/Individual 401k at Fidelity or ETrade for the purpose of "isolating the basis" in his IRAs as described at fairmark.com.

Technically he should be a business owner to do this, but the barriers to entry of being an ebay seller type of business should be quite low. He would not be able to make new contributions unless he has profits from the "business", but rollovers would NOT be limited by any lack of profits.

-gauss
__________________

__________________
gauss is offline   Reply With Quote
Reply

Tags
401k


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
After tax 401k contributions ronocnikral FIRE and Money 3 06-21-2010 01:29 PM
Pros and Cons of After Tax 401K Contributions TooFrugal FIRE and Money 25 12-16-2009 07:28 PM
After-tax contributions to 401k? igsoy FIRE and Money 26 01-09-2008 04:09 PM
after-tax contributions to 401K - pros/cons? simple girl FIRE and Money 14 10-12-2006 02:27 PM
Rolling over 401k/IRA to Fidelity, any ideas? OldAgePensioner FIRE and Money 0 10-22-2005 09:10 AM

 

 
All times are GMT -6. The time now is 02:30 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.