Roth Conversion and Withdrawal

[Green Papaya]

A 401K can have after-tax dollars but that is different than a Roth Account. The difference is the gains made by the after-tax dollars is still taxable. In a Roth account the gains are nontaxable. If I was you the first chance I get I would convert 401K after-tax dollars into a Roth 401K or Roth IRA. When you make that conversion you only have to pay the tax on the gains and not the original amount. After that you'll never have to pay tax on that again. If you're going to do a Roth conversion, after tax dollars should be the first dollars you convert.

+1
When we converted our 401K after-tax into Roth IRA, we paid tax on the gains in 401K after-tax portion. Our pre-tax 401K and Roth 401K roll over into IRA and Roth IRA, respectively, were non-taxable.

 

[Bogie]

https://www.bizjournals.com/twincit...ding-the-five-year-roth-withdrawal-rules.html


According to this you have a 5 year waiting period for each conversion in a Roth Conversion.

 

[pb4uski]

^^^ only if you are less than 59 1/2. Once you are 59 1/2 you can access all in your Roth penalty and tax-free.

 

[Exchme]

For a chart showing all the permutations for Roth withdrawals, see the bogleheads wiki:
https://www.bogleheads.org/wiki/Roth_IRA#Distributions

 

[gauss]

I rolled my Roth 401(k) initial contributions, with growth, into a Roth IRA. It was reported as a non-taxable event.

This would not be the same with an after tax 401(k) (ie non-Roth).

The earnings in an after tax 401k would be subtract to income taxes when withdrawn.

In a true Roth 401k, on the other hand, it would be possible to avoid taxes on the earnings.

gauss