Transferring After-Tax 401K Funds on Retirement

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Chaz01
Posts: 2
Joined: Tue Mar 20, 2018 4:35 pm

Transferring After-Tax 401K Funds on Retirement

Post by Chaz01 » Thu Jun 21, 2018 2:11 pm

I have just retired (age 70) and I am rolling over my 401K from Fidelity to Vanguard. My 401K contains both pre- and after-tax money. Vanguard tells me that my AFTER-TAX money should be deposited into my existing Vanguard Roth IRA account. This does not sound right. Based on my current income, I no longer qualify for Roth contributions. My question: Is it OK for my Fidelity 401K AFTER-TAX money to be deposited into this Vanguard Roth or should it be deposited into a plain (not Roth) after-tax account? Of course, I’d prefer to put this money into my Roth, but I don’t want to be subject to a penalty. Please advise.

NonnyGoGo
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Joined: Tue Feb 03, 2015 2:04 pm

Re: Transferring After-Tax 401K Funds on Retirement

Post by NonnyGoGo » Thu Jun 21, 2018 5:54 pm

You can rollover the contribution portion of the after-tax 401K to a Roth IRA. The earnings can go with your pre-tax 401K funds to an IRA. There's a lot to read on this topic. Here is one: viewtopic.php?t=248046. Take your time to understand the terminology - it seems rollovers are hard to fix if they go wrong.

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Earl Lemongrab
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Re: Transferring After-Tax 401K Funds on Retirement

Post by Earl Lemongrab » Thu Jun 21, 2018 6:11 pm

Rollovers aren't contributions so none of the rules concerning that matter. You can do rollovers if you have no income, if you're over 70.5 (for TIRAs), etc.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

Chaz01
Posts: 2
Joined: Tue Mar 20, 2018 4:35 pm

Re: Transferring After-Tax 401K Funds on Retirement

Post by Chaz01 » Fri Jun 22, 2018 3:21 pm

Thank you all for your responses. The takeaway for me is that the rollover in my case is not considered a contribution since its from one IRA to another.

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