Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 09-25-2014, 11:35 AM
Junior Member
 
Join Date: Dec 2013
Posts: 11
Rool-over from "traditional after-tax 401k" to "Roth IRA"

I want to do in-service roll-over from my "traditional after-tax 401k" employer savings plan to my "Roth IRA" (both accounts are administered by the same investment company). Would this be treated the same as a rollover from a traditional IRA to a Roth IRA (that is, that the amount of the rollover that would be tax-free would be based on the ratio of after-tax and pre-tax money in the 401k), or would it be tax-free (except for any earnings on after-tax contributions that haven't been taxed yet)? Thank you.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 09-27-2014, 03:33 AM
Moderator
 
Join Date: Oct 2010
Posts: 4,801
Quote:
Originally Posted by golf2000 View Post
I want to do in-service roll-over from my "traditional after-tax 401k" employer savings plan to my "Roth IRA" (both accounts are administered by the same investment company). Would this be treated the same as a rollover from a traditional IRA to a Roth IRA (that is, that the amount of the rollover that would be tax-free would be based on the ratio of after-tax and pre-tax money in the 401k), or would it be tax-free (except for any earnings on after-tax contributions that haven't been taxed yet)? Thank you.
I want to do in-service roll-over from my "traditional after-tax 401k" employer savings plan to my "Roth IRA" (both accounts are administered by the same investment company). Would this be treated the same as a rollover from a traditional IRA to a Roth IRA (that is, that the amount of the rollover that would be tax-free would be based on the ratio of after-tax and pre-tax money in the 401k), ===========>>>>>>>>>> it depends. After-tax 401(k) is a type of deferred 401k subaccount typically used in strategies to rollover money to Roth IRAs far in excess of normal contribution limits; plenty of people do roll after-tax 401k funds directly to their Roth.when rolling a 401(k) with after-tax contributions to an IRA, the standard procedure used to be that the after-tax contributions would be paid to the employee while all the pretax moneys would go into an IRA. These days many want the after-tax contributions sent to a Roth IRA instead. Same process applies to after-tax 401k money that is rolled over to a Roth. Aslongas you rollover after-tax money directly to a Roth Ira, it seems your primary risk is that if the transaction is audited it may be considered to be a Roth conversion, and you would owe taxes on a pro-rata share of the amount rolled to the Roth. For example, if you had $10k of non-deductible contributions (after-tax) and $90k of deductible funds (before-tax) and you converted $10k to a Roth, 90% of the converted amount would be considered taxable income. So as you said if you had a lot of pre-tax money in your 401k, this could end up being a big tax bill.
Keep in mind that not all employer-sponsored plans allow for in-service withdrawals. Profit-sharing plans and 401(k)s may allow them, but money purchase pension and defined benefit plans do not.


or would it be tax-free (except for any earnings on after-tax contributions that haven't been taxed yet)?===============>>>>>>>>>>>>as mentioned above.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


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

vB 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
IRS announces several "Tax Benefits Increase Due to Inflation Adjustments for the tax year 2012." TaxGuru Tax News 0 10-22-2011 12:49 PM
"Estimated Taxes Not Required" + Foreign Earned Income + Got Married (Help!) The Dude Estimated Taxes 1 07-13-2011 05:07 AM
When must Corporations use the "Electronic Filing" method for 1096 and 1099's in 2010? TaxGuru Income 0 12-14-2010 12:43 PM
The IRS requires "Many Tax Return Preparers Required to Use IRS e-file Beginning in 2011!" TaxGuru CPA Forums 0 10-13-2010 10:03 AM
The IRS announces "Increased Estate Tax Applicable Exclusion Amount" for 2009! TaxGuru Trusts and Gift Tax Returns 0 07-15-2009 02:31 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning