Originally Posted by stepford
I have a 401K at work consisting mostly of tax deferred money, but a few 10's of $K were after tax contributions. I know that after retirement I can roll the whole 401K over with the taxable portion going into a Roth and the tax deferred into a t-IRA.
My question is whether there is any way to put the taxable component into a Roth while leaving the tax deferred in the 401K.
The easy way:
I believe that pre-1987 after-tax contributions have different rules that apply.
Contributions made before 1987
Prior to the Tax Reform Act of 1986, individuals who made after-tax contributions to employer plans could generally withdraw those contributions without taking any taxable dollars from the plan. This generous rule was retained for contributions made before 1987, provided that the plan permitted in-service distributions as of May 5, 1986
The harder way:
Does your 401k accept incoming rollovers from traditional IRAs? If so, you could roll the money out, isolate your basis, then roll the taxable funds back into the 401k. Full details available at fairmark.com via searching for "isolating the basis".
Either way, you may wish to perform a small transfer/rollover first in one year and then verify when you do your taxes and receive your 1099-R's that everything worked the way you planned. That way if there is a mistake in your understanding you can correct your tactics before moving the big money.