Most 401k plans won't allow "in-service" transfer out of plan. Mine doesn't with last two employers. You typically transfer out of 401k when you change job or if you turn 59.5. One shot. I do trustee-to-trustee transfer once every time I change job. After-tax contributions (principal only) goes to Roth IRA, entire balance of Roth 401k (contributions and gains) also goes to Roth IRA and reminder (pretax contributions+gains and gains on post-tax contributions) goes to new employer 401k (or you can choose rollover IRA). I choose 401k for later so I can do easy backdoor contributions to Roth IRA.pjigar, thanks for posting about After-tax 401k. Can I ask you some questions?
How often do you convert to Roth 401k?
Reading some IRS rules it seems like when converting and if there are some earnings - I need to pay taxes on the those. To avoid it I see 2 ways :
1 - convert as soon as possible that no earnings would be accumulated, but that would be every 2 weeks, Fidelity plan allows unlimited number "in-Plan"conversions
2 - convert at the same time into both Roth and Traditional 401k, contribution to Roth, earnings to Traditional, not sure if plan allows that though, need to experiment, may try at the end of the year with small amount and see how all will flow into tax return.
How do you do it?
Anyone else with experience- please chime too in
The plan keeps track of after-tax contributions for you. Just ask them to cut check for those contributions to date everytime you call. Easy peasy. Keep the earnings on those contributions in the plan if you want to keep doing backdoor Roth IRA contributions.
