Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
401K and Roth 401K in same account--issues?
Old 11-25-2017, 08:39 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 9,108
401K and Roth 401K in same account--issues?

My son showed me his retirement account through his job. He contributes to both a 401K and a Roth 401K. I think he gets both matched up to 3%--can't do more than 3% in either account, so it makes sense to have both.

Both contributions go into the same account, which I find odd because one is pre-tax and the other is post-tax. Is this going to cause issues down the line? From what I've read, if he keeps them in that account until distribution, at that point anything he takes out would be split at the ratio they are in the account or perhaps were contributed. For him it's 50/50 either way right now.

That's not ideal, but can he separate them into a tIRA and a Roth IRA in a rollover? His account info does show the split of pre/post tax so the info is there if it's allowed.

I never did a Roth 401K so I have no experience with them and was confused when I saw them in the same account.
__________________

RunningBum 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 11-25-2017, 09:06 PM   #2
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,814
Strange that they are kept in one account. Talk about a recipe for complexity down the road.
__________________

__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward is offline   Reply With Quote
Old 11-25-2017, 09:07 PM   #3
Recycles dryer sheets
 
Join Date: Jan 2017
Location: Charlotte
Posts: 222
Quote:
Originally Posted by RunningBum View Post
My son showed me his retirement account through his job. He contributes to both a 401K and a Roth 401K. I think he gets both matched up to 3%--can't do more than 3% in either account, so it makes sense to have both.

Both contributions go into the same account, which I find odd because one is pre-tax and the other is post-tax. Is this going to cause issues down the line? From what I've read, if he keeps them in that account until distribution, at that point anything he takes out would be split at the ratio they are in the account or perhaps were contributed. For him it's 50/50 either way right now.

That's not ideal, but can he separate them into a tIRA and a Roth IRA in a rollover? His account info does show the split of pre/post tax so the info is there if it's allowed.

I never did a Roth 401K so I have no experience with them and was confused when I saw them in the same account.
I believe any match by the company MUST go into the tIRA regardless if is based on a Roth contribution or not.
bw5972 is offline   Reply With Quote
Old 11-25-2017, 09:13 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 9,108
Quote:
Originally Posted by bw5972 View Post
I believe any match by the company MUST go into the tIRA regardless if is based on a Roth contribution or not.
I'll recheck that when I see him again. I remember he asked me about it when he was first eligible for it. I would've suggested just adding to his Roth IRA at VG over a Roth 401K if there was no match, but it's possible the match is going to the tIRA. I didn't check the current balances closely to know for sure, just that his contributions were the same and both in that same account.
RunningBum is offline   Reply With Quote
Old 11-25-2017, 10:28 PM   #5
Full time employment: Posting here.
FlaGator's Avatar
 
Join Date: Aug 2008
Location: The 850
Posts: 604
My former employer offered both and I contributed to the Roth 401k once it was offered. Their match went into my regular 401k.

Though may they appear as "one account" on the statement, I'd bet they are accounted for separately and there won't be an issue if/when he separates from the company and wants to do something different with the money.
__________________
Stay at home slacker dad since 2015
FlaGator is offline   Reply With Quote
Old 11-25-2017, 11:04 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 8,022
I have my own self employment 401K and later added a Roth 401K.
Both show up on the same login, but they do each show as separate totals, and each with their own contribution history.
Maybe how it's presented is what is confusing ?
Sunset is offline   Reply With Quote
Old 11-25-2017, 11:35 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 3,212
You need to look at the statements in detail. My 401k (all regular) even broke out sources of the funding and did note the post tax amounts that were include (not roth since it was not available while I was working at the company) But somewhere on the statement there will be categories and amounts in these various categories. (Which might not show up on the summary)
meierlde is offline   Reply With Quote
Old 11-25-2017, 11:52 PM   #8
Thinks s/he gets paid by the post
Huston55's Avatar
 
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,505
Quote:
Originally Posted by RunningBum View Post
My son showed me his retirement account through his job. He contributes to both a 401K and a Roth 401K. I think he gets both matched up to 3%--can't do more than 3% in either account, so it makes sense to have both.

Both contributions go into the same account, which I find odd because one is pre-tax and the other is post-tax. Is this going to cause issues down the line? From what I've read, if he keeps them in that account until distribution, at that point anything he takes out would be split at the ratio they are in the account or perhaps were contributed. For him it's 50/50 either way right now.

That's not ideal, but can he separate them into a tIRA and a Roth IRA in a rollover? His account info does show the split of pre/post tax so the info is there if it's allowed.

I never did a Roth 401K so I have no experience with them and was confused when I saw them in the same account.
Yes. They will be accounted for separately in his 401k, and he will be able to roll over the Roth 401k (and any earnings) into a Roth IRA, as a non-taxable event, if he chooses to do so. Been there done that, and the originating 401k plan administrators will be able to give him the guidance he needs when the time comes.

Note that he will also be able to roll over any additional ‘after tax’ 401k contributions to a Roth IRA if he so chooses at a later date; separate rules though.

Quote:
Originally Posted by FlaGator View Post
My former employer offered both and I contributed to the Roth 401k once it was offered. Their match went into my regular 401k.

Though may they appear as "one account" on the statement, I'd bet they are accounted for separately and there won't be an issue if/when he separates from the company and wants to do something different with the money.
+1

And, they are accounted for separately.

The only thing I’d add to this is that your son should read the ‘401k Plan Description’ in detail; there can be quite a bit of difference from plan to plan. But, the ability to roll “Roth” to “Roth” will exist regardless of his ‘Plan Description.’
__________________
You may be whatever you resolve to be.

100% x 10% > 10% x 100%
Huston55 is offline   Reply With Quote
Old 11-26-2017, 04:30 AM   #9
Recycles dryer sheets
atmsmshr's Avatar
 
Join Date: Mar 2016
Location: An island off the coast of Florida. (Ok - if you really need to know it's Vero Beach)
Posts: 346
After reading about the 5 year clock for Roth accounts on this forum, I started a small Roth inside my 401k this year just to get the clock ticking. Fidelity shows this Roth as a separate lines item - with all of the company match going to the tax deferred section.
atmsmshr is offline   Reply With Quote
Old 11-26-2017, 07:56 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 2,420
I had both at one employer and contributed to both. Both accounts were under the same login, but were clearly separate accounts to me. I would be surprised if they are not held is separate accounts. They may be under the same login and have some consolidated reporting.
bingybear is offline   Reply With Quote
Old 11-26-2017, 08:22 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 9,834
Quote:
Originally Posted by atmsmshr View Post
After reading about the 5 year clock for Roth accounts on this forum, I started a small Roth inside my 401k this year just to get the clock ticking. Fidelity shows this Roth as a separate lines item - with all of the company match going to the tax deferred section.
I wonder if your 5-year Roth clock was started by a Roth 401(k). I thought one need a Roth IRA to start that clock.
LOL! is offline   Reply With Quote
Old 11-26-2017, 08:34 AM   #12
Recycles dryer sheets
 
Join Date: Sep 2016
Location: Way up North
Posts: 246
Quote:
Originally Posted by atmsmshr View Post
After reading about the 5 year clock for Roth accounts on this forum, I started a small Roth inside my 401k this year just to get the clock ticking. Fidelity shows this Roth as a separate lines item - with all of the company match going to the tax deferred section.
There are separate "clocks" or waiting periods for Roth 401Ks and for Roth IRAs. There is a 5 year clock started for each separate 401K and one for all
IRAs in aggregate. Doesn't make sense, but them's the rules.
https://www.kitces.com/blog/understa...d-conversions/
bada bing is offline   Reply With Quote
Old 11-26-2017, 08:42 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 9,108
Quote:
Originally Posted by Huston55 View Post
Yes. They will be accounted for separately in his 401k, and he will be able to roll over the Roth 401k (and any earnings) into a Roth IRA, as a non-taxable event, if he chooses to do so. Been there done that, and the originating 401k plan administrators will be able to give him the guidance he needs when the time comes.

Note that he will also be able to roll over any additional ‘after tax’ 401k contributions to a Roth IRA if he so chooses at a later date; separate rules though.


OK, thanks, that's reassuring.

I'm 98% sure they are in the same account. He's got both sides invested in the same S&P 500 index fund. The first thing I saw was the whole amount in that one fund. It would seem very unusual for them to display separate accounts with the same fund as a single entry.
RunningBum is offline   Reply With Quote
Old 11-26-2017, 09:45 AM   #14
Thinks s/he gets paid by the post
Huston55's Avatar
 
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,505
Quote:
Originally Posted by RunningBum View Post
OK, thanks, that's reassuring.

I'm 98% sure they are in the same account. He's got both sides invested in the same S&P 500 index fund. The first thing I saw was the whole amount in that one fund. It would seem very unusual for them to display separate accounts with the same fund as a single entry.
Yea, the multi-account/multi-source thing can make reading one’s 401k statement a chore. But, one view of mine also shows all sources that are in the same fund (i.e.: S&P500, US Bonds, etc.) as a single amount; other statement views show the contribution “by source”, which is what your son’s interested in if he plans transfers to IRAs at a later date. For example, that “by source” view of my old 401k shows balances categorized like this:

-Employee Pre-Tax Contributions
-Employer Match
-Employer Profit Sharing Contributions
-Roth 401k
-Post 86 After-Tax Contributions*

*Certain 401k plans allow continued contributions beyond set annual levels (which ours did), which results in this pot of funds. Depending on the 401k’s Plan Description, these ‘contributions’ can be transferred to a Roth IRA; the associated earnings must be transferred to a TIRA; both are non-taxable events. Here’s a link explaining that.

https://money.stackexchange.com/ques...1k-to-roth-ira
__________________
You may be whatever you resolve to be.

100% x 10% > 10% x 100%
Huston55 is offline   Reply With Quote
Old 11-26-2017, 12:48 PM   #15
Full time employment: Posting here.
 
Join Date: Nov 2013
Posts: 575
My after tax 401k contributions show up as being in the same account as the tax deferred. I can choose the after tax contributions to go to a separate fund, but when I don’t and the funds are invest in the same funds, there is no breakout between tax deferred and after tax. The contributions and earnings for the aftertax can be withdrawn to a Roth IRA, but taxes has to be paid for any earnings.

Just because it is not broken out in separate accounts don’t mean anything IMO. I’m sure the plan documents spell it out.
NgineER is offline   Reply With Quote
Old 11-26-2017, 01:44 PM   #16
Thinks s/he gets paid by the post
Huston55's Avatar
 
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,505
Quote:
Originally Posted by NgineER View Post
My after tax 401k contributions show up as being in the same account as the tax deferred. I can choose the after tax contributions to go to a separate fund, but when I don’t and the funds are invest in the same funds, there is no breakout between tax deferred and after tax. The contributions and earnings for the aftertax can be withdrawn to a Roth IRA, but taxes has to be paid for any earnings.

Just because it is not broken out in separate accounts don’t mean anything IMO. I’m sure the plan documents spell it out.
Not exactly.

The after-tax ‘contributions’ can be transferred to a Roth IRA, and are completely tax free. The after-tax ‘earnings’ must be transferred to a TIRA, which is a non-taxable event; tax on the TIRA ‘earnings’ is taxable only upon withdrawal.
__________________
You may be whatever you resolve to be.

100% x 10% > 10% x 100%
Huston55 is offline   Reply With Quote
Old 11-26-2017, 01:48 PM   #17
Full time employment: Posting here.
 
Join Date: Nov 2013
Posts: 575
When I have had earnings in my aftertax portion of the account. I have the option to pay taxes on it or leave it in the account.
NgineER is offline   Reply With Quote
Old 11-26-2017, 02:02 PM   #18
Dryer sheet wannabe
 
Join Date: Jul 2017
Posts: 22
Quote:
Originally Posted by bw5972 View Post
I believe any match by the company MUST go into the tIRA regardless if is based on a Roth contribution or not.
I know the match from the money I put into my Roth 401(k) goes into the traditional portion of my 401(k).
Swordplay Charlie is offline   Reply With Quote
Old 11-26-2017, 03:20 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 3,212
Quote:
Originally Posted by RunningBum View Post
OK, thanks, that's reassuring.

I'm 98% sure they are in the same account. He's got both sides invested in the same S&P 500 index fund. The first thing I saw was the whole amount in that one fund. It would seem very unusual for them to display separate accounts with the same fund as a single entry.
That is how Vanguard did it with the various sources of funds for example Before Tax Basic, Before Tax Supplemental, company matched leveraged, after tax supplemental etc.
meierlde is offline   Reply With Quote
Old 11-26-2017, 03:32 PM   #20
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 4,692
I also contributed to both Roth and trad 401k with matching funds going automatically to traditional. It gets a bit messy when exchanging funds and taking distributions but Fido is pretty good about distinguishing between the two. Although the funds appear to be intermixed, there is a specific view that identifies the "source" as others have indicated. Funds coming out of the Roth can go to Roth IRA.
__________________

__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is online now   Reply With Quote
Reply


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
72t withdrawal from IRA and Roth IRA coversion at same time? Al18 FIRE and Money 11 01-22-2017 06:37 AM
Confused choosing between: 401K, Roth 401K, Roth IRA or Traditional IRA? krldrummerboy FIRE and Money 22 05-26-2016 12:46 PM
2011 and 2012 tax planning... Roth IRA and Roth 401k jIMOh FIRE and Money 6 05-02-2010 11:20 AM
401K, Roth IRA, Roth 401K - Need advice please tsturbo FIRE and Money 15 05-10-2009 03:08 PM

» Quick Links

 
All times are GMT -6. The time now is 06:24 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×