sphynxy9291 wrote:Even if I'm past the income limit? I can go directly from After-Tax (not Roth 401(k)) to Roth IRA?
jane1 wrote:According to our current 401k administrator, per IRS rules, if I have pre-tax and after-tax money in the 401k and I rollover to Roth, it will be pro-rata. i.e. I can't choose to rollover just the after-tax. So I would have to pay tax on the pre-tax contributions.
Of course if you only have after-tax & Roth 401k contributions in your 401k, only your earnings would be taxable when you rollover to Roth.
Alan S. wrote:That doesn't sound right. The company PS contributions should not be lumped with your employee after tax contributions unless the plan does NOT maintain a separate sub account for the after tax contributions and their earnings. If the plan does maintain the separate sub account, you should be able to do a direct rollover of ONLY that sub account balance to your Roth IRA, with only the earnings on your after tax contributions taxable as part of that rollover. I think you need to clarify this difference with the plan. The goal is to get as much of the after tax balance into your Roth IRA without dragging along too much in taxable amounts from the earnings.
BrandonBogle wrote:I wonder about considering the "Regular Withdrawal". None of these funds then would be taxed already, so I'd have to pay nominal taxes on that.
Default User BR wrote:BrandonBogle wrote:I wonder about considering the "Regular Withdrawal". None of these funds then would be taxed already, so I'd have to pay nominal taxes on that.
Without knowing your tax rate(s) it's difficult to say. Generally it's not a great idea to convert tax-deferred to Roth. If your plan isn't good, it might be worthwhile to roll out the employer contributions to a TIRA and leave them there. If at some time you needed to do backdoor Roth, that would be a problem.
BrandonBogle wrote:Thanks Brian. I linked to my portfolio a little further up (http://www.bogleheads.org/forum/viewtopic.php?f=1&t=110026). I'm 25%/8% marginal, 15%/7% effective. The main goal was to get rid of the tracking and any pro-rata concerns of the After-Tax down the road. Based on your and Alan's suggestions, I feel more comfortable leaving the the DPS as is in the 401k. I've got decent non-Vanguard low-cost index choices in there.
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