Mega-backdoor roth ira conversion with one check

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international001
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Mega-backdoor roth ira conversion with one check

Post by international001 » Tue Jul 24, 2018 4:32 am

I'm trying to do an in-service distribution from Fidelity 401k after-tax to Vanguard

I thought I needed 1 check for after-tax contributions -> Roth and 1 check for after-tax earning -> traditional earnings

But Fidelity offered me the option of doing it with just one check that would go to Roth. Of course, they will issue a 1099-R so I pay taxes on the earnings


Is this something new? Why now?

Any IRS references? I only found a 2 check version:

https://www.irs.gov/pub/irs-drop/n-14-54.pdf
"Example 4. The facts are the same as in Example 1, except that Employee C chooses to make a direct rollover of $80,000 to a traditional IRA and $20,000 to a Roth IRA. Employee C is permitted to allocate the $80,000 that consists entirely of pretax amounts to the traditional IRA so that the $20,000 rolled over to the Roth IRA consists entirely of after-tax amounts."

magicrat
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Re: Mega-backdoor roth ira conversion with one check

Post by magicrat » Tue Jul 24, 2018 7:38 am

This is probably because Fidelity does not actually understand what you are trying to do. I have this problem. I solve this by sending the 1 check to my tIRA, then rolling the pre-tax amount back into my 401k, and the remaining after-tax amount into my Roth.

Spirit Rider
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Re: Mega-backdoor roth ira conversion with one check

Post by Spirit Rider » Tue Jul 24, 2018 9:18 am

Fideliry knows exactly what they are doing. This is not something new since IRS Notice 2014-54. The Fidelity CSR is trying to help you by making sure you are aware of the options.

The split-rollover was exactly what was enabled by Notice 2014-54. Prior to this based on notice 2008-68, IRS guidance required a single rollover.

The split-rollover allows you to make two direct tax-free rollovers. The after-tax contributions to a Roth IRA and the pre-tax earnings on the after-tax contributions to a traditional IRA..

In a single rollover to a Roth IRA, the pre-tax earnings will be taxable. Since the rollover goes directly to a Roth IRA, there is no pro-rata taxation.

You have to choose which is better for you and your circumstances. If you have an existing traditional IRA balance and/or your 401k plan does not accept IRA rollovers you will probably want to do a single Roth rollover.

You can still do a tax-free spilt-rollover and accumulate the pre-tax earnings in a traditional IRA if you do not have a need for the Backdoor Roth. However, if you do or simply want to keep your traditional IRA balances $0. If your 401k plan accepts IRA rollovers. You can as pointed out, roll the pre-tax IRA balance back into the 401k.

retiredjg
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Re: Mega-backdoor roth ira conversion with one check

Post by retiredjg » Tue Jul 24, 2018 9:31 am

If you do it with one check to Roth IRA, you will pay tax on the earnings. If you do the split rollover (2 checks, 2 IRAs), you do not pay tax now on the earnings.

If you are willing to hold your Roth IRA at Fidelity, it can all be done with a phone call - no checks involved and no time out of the market....or so it is reported frequently here. You might ask if you are interested.

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Tue Jul 24, 2018 10:51 am

Spirit Rider wrote:
Tue Jul 24, 2018 9:18 am
Fideliry knows exactly what they are doing. This is not something new since IRS Notice 2014-54. The Fidelity CSR is trying to help you by making sure you are aware of the options.

The split-rollover was exactly what was enabled by Notice 2014-54. Prior to this based on notice 2008-68, IRS guidance required a single rollover.

The split-rollover allows you to make two direct tax-free rollovers. The after-tax contributions to a Roth IRA and the pre-tax earnings on the after-tax contributions to a traditional IRA..

In a single rollover to a Roth IRA, the pre-tax earnings will be taxable. Since the rollover goes directly to a Roth IRA, there is no pro-rata taxation.

You have to choose which is better for you and your circumstances. If you have an existing traditional IRA balance and/or your 401k plan does not accept IRA rollovers you will probably want to do a single Roth rollover.

You can still do a tax-free spilt-rollover and accumulate the pre-tax earnings in a traditional IRA if you do not have a need for the Backdoor Roth. However, if you do or simply want to keep your traditional IRA balances $0. If your 401k plan accepts IRA rollovers. You can as pointed out, roll the pre-tax IRA balance back into the 401k.
THanks! So I see one of the advantages of one check rollover is avoiding pro-rata issues. I don't have any money on tIRA, and I plan to convert the earnings to Roth (by paying taxes) as soon as I get it. So it doesn't matter for me what option I use

So you are saying after IRS Notice 2014-54 both the 1 check and the 2 checks rollover were possible?

IS this someplace explicitly described in the notice or some place else by the IRS?

justaddh30
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Re: Mega-backdoor roth ira conversion with one check

Post by justaddh30 » Tue Jul 24, 2018 10:56 am

Not the OP, but I have questions about the split rollover and rolling earnings back into the employer 401k. (My employer allows it.)

1. What are the steps (at a high level) to do this? Here's what I gather: 1 check for after-tax goes to Roth IRA, 1 check for earnings goes to tIRA (mine has $0 balance currently). Then, contact employer and roll tIRA back into 401k.
1b. My tIRA is at Vanguard, do they charge a fee for rolling back into employer 401k?

2. How does this affect the (non-mega) backdoor roth, if at all? Does having money in a tIRA, even for a few days while the rollover back to employer occurs, trigger pro-rata taxation for a regular backdoor that I did in January?
2b. If this doesn't trigger pro-rata for regular backdoor, then what does? I'm confused about what triggers pro-rata taxation for regular backdoor Roth.

Spirit Rider
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Re: Mega-backdoor roth ira conversion with one check

Post by Spirit Rider » Tue Jul 24, 2018 11:27 am

international001 wrote:
Tue Jul 24, 2018 10:51 am
Thanks! So I see one of the advantages of one check rollover is avoiding pro-rata issues. I don't have any money on tIRA, and I plan to convert the earnings to Roth (by paying taxes) as soon as I get it. So it doesn't matter for me what option I use.
Exactly, but the one rollover is easier. If you have your Roth IRA at the same place as your 401k plan. You can often do this with a simple phone call and maybe in-kind.
So you are saying after IRS Notice 2014-54 both the 1 check and the 2 checks rollover were possible?
Yes, before only one and after either one or two. Note: 2014-5 allows, but does not require a plan to do two rollovers.
IS this someplace explicitly described in the notice or some place else by the IRS?
As is true with many things tax wise, not exactly. Notice 2014-54 is rather cryptic and you have to read between the lines. There is a specific page on the IRS website addressing this, but even that has poor wording that is confusing for a lot of people.

See my response a few days ago in this thread Re: Mega Backdoor Roth IRA Withdrawal Pro-Rata? and the included link.

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Earl Lemongrab
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Re: Mega-backdoor roth ira conversion with one check

Post by Earl Lemongrab » Tue Jul 24, 2018 12:46 pm

By your mention of pro-rata, I assume you're also doing the regular backdoor Roth? If so, then converting the earnings is a way to avoid some annoyance there. You could, if the plan allowed, roll the earnings from a split rollover back into plan.

It comes down to the size of the taxable portion in relation to the impact of it.

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Tue Jul 24, 2018 1:25 pm

Earl Lemongrab wrote:
Tue Jul 24, 2018 12:46 pm
By your mention of pro-rata, I assume you're also doing the regular backdoor Roth? If so, then converting the earnings is a way to avoid some annoyance there. You could, if the plan allowed, roll the earnings from a split rollover back into plan.

It comes down to the size of the taxable portion in relation to the impact of it.
You mean getting to checks and put the after-tax earnings on a traditional IRA? And later move this back to the 401k?
I understand it's possible, but I don't understand why it's worth the hassle. My after-tax earnings are small (as they usually are in a mega-back door strategy)

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Tue Jul 24, 2018 1:31 pm

Exactly, but the one rollover is easier. If you have your Roth IRA at the same place as your 401k plan. You can often do this with a simple phone call and maybe in-kind.
What do you mean *but*? 1 check rollover is both easier and helps avoid pro-prata issues (when doing rollover from traditional IRA to Roth)
Yes, before only one and after either one or two. Note: 2014-5 allows, but does not require a plan to do two rollovers.
I am confused. So before the notice it was possible to do a mega-back door conversion (with just 1 check? (after-tax 401k contributions + earnings -> Roth IRA)
As is true with many things tax wise, not exactly. Notice 2014-54 is rather cryptic and you have to read between the lines. There is a specific page on the IRS website addressing this, but even that has poor wording that is confusing for a lot of people.

See my response a few days ago in this thread Re: Mega Backdoor Roth IRA Withdrawal Pro-Rata? and the included link.
I understand that you meant that as long as you convert *all* the after-tax (contributions + earnings) you should be fine. But it doesn't mention wether you can do it with one check or 2.

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Re: Mega-backdoor roth ira conversion with one check

Post by Alan S. » Tue Jul 24, 2018 1:43 pm

In most cases, if the earnings are small it makes the most sense to have a single direct rollover check made payable to your Roth IRA.

However, if you have enough earnings and you do not want to pay the current taxes, then Notice 2014-54 comes into play with the split rollover. This works fine if done right. If not done right, even if your request was done properly, there have been reports of problems.

Worst problem: Your plan decides to issue a single check, and that is incorrect for a rollover destined to two different IRA types. There should be separate checks, each made payable to "IRA custodian FBO Joe Smith (type of) IRA". Just showing IRA means a TIRA, not a Roth. When your IRA custodian receives a single check, it might end up in either type of IRA. Sometimes, both the plan and the IRA custodians mess up. Then they point fingers at the other custodian and it becomes a major hassle to get it straightened out. So insist on separate checks per IRA type destination.

Lesser problem: Plan issues a single 1099R for a split rollover. Here the problem is that the 1099R instructions differ with respect to boxes 2a and 5 for a qualified rollover contribution to a Roth IRA, and a direct rollover to a TIRA. Some tax programs cannot handle such a single 1099R, and if you use one of those, then you have to dissect the 1099R into two forms and enter them separately per IRA type destination. If you use a paid preparer, you just hope they understand the issues and what the desired tax form output should look like.


I assume that plan administrators that issue a single check are also the ones that issue a single 1099R. Try to avoid either if you are doing a split Notice 2014-54 rollover.

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Earl Lemongrab
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Re: Mega-backdoor roth ira conversion with one check

Post by Earl Lemongrab » Tue Jul 24, 2018 3:26 pm

international001 wrote:
Tue Jul 24, 2018 1:25 pm
Earl Lemongrab wrote:
Tue Jul 24, 2018 12:46 pm
By your mention of pro-rata, I assume you're also doing the regular backdoor Roth? If so, then converting the earnings is a way to avoid some annoyance there. You could, if the plan allowed, roll the earnings from a split rollover back into plan.

It comes down to the size of the taxable portion in relation to the impact of it.
You mean getting to checks and put the after-tax earnings on a traditional IRA? And later move this back to the 401k?
I understand it's possible, but I don't understand why it's worth the hassle. My after-tax earnings are small (as they usually are in a mega-back door strategy)
Sure. That's why I hedged it with the final sentence. If your earnings are small then it's probably easiest to convert it all, in which case a single check is easiest.

retiredjg
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Re: Mega-backdoor roth ira conversion with one check

Post by retiredjg » Tue Jul 24, 2018 3:26 pm

justaddh30 wrote:
Tue Jul 24, 2018 10:56 am
Not the OP, but I have questions about the split rollover and rolling earnings back into the employer 401k. (My employer allows it.)

1. What are the steps (at a high level) to do this? Here's what I gather: 1 check for after-tax goes to Roth IRA, 1 check for earnings goes to tIRA (mine has $0 balance currently). Then, contact employer and roll tIRA back into 401k. Yes, that seems right to me.
1b. My tIRA is at Vanguard, do they charge a fee for rolling back into employer 401k? I do not believe they do.

2. How does this affect the (non-mega) backdoor roth, if at all? Does having money in a tIRA, even for a few days while the rollover back to employer occurs, trigger pro-rata taxation for a regular backdoor that I did in January? Only if the few days includes December 31. What is in tIRA on December 31 is the only thing that matters.

2b. If this doesn't trigger pro-rata for regular backdoor, then what does? I'm confused about what triggers pro-rata taxation for regular backdoor Roth. Having anything in tIRA (including SEP and SIMPLE IRAs) other than a few stray pennies at the end of the year will trigger the pro-rated taxation. See Form 8606. Work through it in pencil. Pay particular attention to what happens if there is a balance on line 6.

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Earl Lemongrab
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Re: Mega-backdoor roth ira conversion with one check

Post by Earl Lemongrab » Tue Jul 24, 2018 3:28 pm

international001 wrote:
Tue Jul 24, 2018 1:31 pm

I am confused. So before the notice it was possible to do a mega-back door conversion (with just 1 check? (after-tax 401k contributions + earnings -> Roth IRA)
You could do that or roll it all to a TIRA. Then roll the pretax part back and convert the remaining basis. Pro-rata does not apply when doing a rollover to a qualified plan.

Spirit Rider
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Re: Mega-backdoor roth ira conversion with one check

Post by Spirit Rider » Tue Jul 24, 2018 4:02 pm

Alan and Earl have answered your questions, unless there is still something you don't understand.

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Tue Jul 24, 2018 4:46 pm

Earl Lemongrab wrote:
Tue Jul 24, 2018 3:28 pm
international001 wrote:
Tue Jul 24, 2018 1:31 pm

I am confused. So before the notice it was possible to do a mega-back door conversion (with just 1 check? (after-tax 401k contributions + earnings -> Roth IRA)
You could do that or roll it all to a TIRA. Then roll the pretax part back and convert the remaining basis. Pro-rata does not apply when doing a rollover to a qualified plan.
My understanding was that before 2015 you would not be able to rollover the after-tax (contributions and earnings) to IRAs. You would have have to do a prorata with the rest of pre-tax 401k

https://www.kitces.com/blog/irs-notice- ... onversion/

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Tue Jul 24, 2018 4:51 pm

Alan S. wrote:
Tue Jul 24, 2018 1:43 pm
In most cases, if the earnings are small it makes the most sense to have a single direct rollover check made payable to your Roth IRA.

However, if you have enough earnings and you do not want to pay the current taxes, then Notice 2014-54 comes into play with the split rollover. This works fine if done right. If not done right, even if your request was done properly, there have been reports of problems.

Worst problem: Your plan decides to issue a single check, and that is incorrect for a rollover destined to two different IRA types. There should be separate checks, each made payable to "IRA custodian FBO Joe Smith (type of) IRA". Just showing IRA means a TIRA, not a Roth. When your IRA custodian receives a single check, it might end up in either type of IRA. Sometimes, both the plan and the IRA custodians mess up. Then they point fingers at the other custodian and it becomes a major hassle to get it straightened out. So insist on separate checks per IRA type destination.

Lesser problem: Plan issues a single 1099R for a split rollover. Here the problem is that the 1099R instructions differ with respect to boxes 2a and 5 for a qualified rollover contribution to a Roth IRA, and a direct rollover to a TIRA. Some tax programs cannot handle such a single 1099R, and if you use one of those, then you have to dissect the 1099R into two forms and enter them separately per IRA type destination. If you use a paid preparer, you just hope they understand the issues and what the desired tax form output should look like.


I assume that plan administrators that issue a single check are also the ones that issue a single 1099R. Try to avoid either if you are doing a split Notice 2014-54 rollover.

I guess I am confused with what other BH said. I thought this would be a split-rollover (and what I am trying to do)

(1)
401k after-tax contributions -> check 1 -> roth IRA
401k after-tax earnings -> check 2 -> traditional IRA -> roth IRA

But from your comments you seem to mean that this is split-rollover
(2)
401k after-tax contributions -> check 1 -> roth IRA
401k after-tax earnings -> check 2 -> traditional IRA -> 401k pre-tax

So folks should avoid (2) with 1 single check
But (1) with one single check is just fine?

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Earl Lemongrab
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Re: Mega-backdoor roth ira conversion with one check

Post by Earl Lemongrab » Tue Jul 24, 2018 4:52 pm

international001 wrote:
Tue Jul 24, 2018 4:46 pm
My understanding was that before 2015 you would not be able to rollover the after-tax (contributions and earnings) to IRAs. You would have have to do a prorata with the rest of pre-tax 401k

https://www.kitces.com/blog/irs-notice- ... onversion/
Nope. I've been doing Mega since 2007. In fact it's impossible to pro-rate, because the law prohibits distributing employee deferrals and Roth contributions. The only thing the clarification was bless the split of the after-tax and earnings. Some plans were already doing that. Megacorp wasn't, so you had to roll the AT + earnings to a TIRA, roll the earnings back, then convert. Or send it all to the Roth.

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Re: Mega-backdoor roth ira conversion with one check

Post by Earl Lemongrab » Tue Jul 24, 2018 4:53 pm

international001 wrote:
Tue Jul 24, 2018 4:51 pm
I guess I am confused with what other BH said. I thought this would be a split-rollover (and what I am trying to do)

(1)
401k after-tax contributions -> check 1 -> roth IRA
401k after-tax earnings -> check 2 -> traditional IRA -> roth IRA

But from your comments you seem to mean that this is split-rollover
(2)
401k after-tax contributions -> check 1 -> roth IRA
401k after-tax earnings -> check 2 -> traditional IRA -> 401k pre-tax

So folks should avoid (2) with 1 single check
But (1) with one single check is just fine?
You're jumping around a lot. A single check makes sense if you want to have it all go to the Roth. If you want to split, then two checks makes is easier. Otherwise you have to do a rollover back to the plan.

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Re: Mega-backdoor roth ira conversion with one check

Post by retiredjg » Tue Jul 24, 2018 5:07 pm

international001 wrote:
Tue Jul 24, 2018 4:46 pm
Earl Lemongrab wrote:
Tue Jul 24, 2018 3:28 pm
international001 wrote:
Tue Jul 24, 2018 1:31 pm

I am confused. So before the notice it was possible to do a mega-back door conversion (with just 1 check? (after-tax 401k contributions + earnings -> Roth IRA)
You could do that or roll it all to a TIRA. Then roll the pretax part back and convert the remaining basis. Pro-rata does not apply when doing a rollover to a qualified plan.
My understanding was that before 2015 you would not be able to rollover the after-tax (contributions and earnings) to IRAs. You would have have to do a prorata with the rest of pre-tax 401k
According to people here, that is not correct. People have been doing the mega back door - and reporting it here - for longer than that.

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Re: Mega-backdoor roth ira conversion with one check

Post by retiredjg » Tue Jul 24, 2018 5:14 pm

I guess I am confused with what other BH said. I thought this would be a split-rollover (and what I am trying to do)

(1)
401k after-tax contributions -> check 1 -> roth IRA
401k after-tax earnings -> check 2 -> traditional IRA -> roth IRA
This edited version is a split rollover.

What happens to the tIRA after the original rollover is not relevant. (However, doing it this way serves no purpose and is just one more step that can get screwed up and one more step that has to be reported on your taxes.). Don't do it this way.


But from your comments you seem to mean that this is split-rollover
(2)
401k after-tax contributions -> check 1 -> roth IRA
401k after-tax earnings -> check 2 -> traditional IRA -> 401k pre-tax
It is a split rollover because money from the 401k went to two different accounts. Again, what happens to the money that goes to the traditional IRA is not relevant to whether it is a split rollover or not.

If you want all the money to go to Roth IRA, do not do a split rollover. Send the entire amount directly to Roth IRA.. This is the easiest method. It is the method that will result in the fewest mistakes. It is the method that requires the fewest steps on your tax return. It is the method that will result in the fewest mistakes on your tax return.

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Re: Mega-backdoor roth ira conversion with one check

Post by Spirit Rider » Wed Jul 25, 2018 12:28 am

I agree 100% with retiredjg:

There is no good reason to do a split-rollover if you intend to rollover to a Roth IRA anyways. Just do a direct rollover of everything to the Roth IRA. The earnings will be taxable.

The only reason to do the split-rollover is to avoid paying taxes on the pre-tax earnings. Either leaving them in the traditional IRA or rolling them back into the 401k.

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Wed Jul 25, 2018 3:38 am

Thanks all for the clarification. I guess I was very confused.
Earl Lemongrab wrote:
Tue Jul 24, 2018 4:52 pm
Nope. I've been doing Mega since 2007. In fact it's impossible to pro-rate, because the law prohibits distributing employee deferrals and Roth contributions. The only thing the clarification was bless the split of the after-tax and earnings. Some plans were already doing that. Megacorp wasn't, so you had to roll the AT + earnings to a TIRA, roll the earnings back, then convert. Or send it all to the Roth.
This seems just a little technicality about how to do the intermediate steps. So 2014-54 doesn't really allow you to achieve anything different as *end result* ?

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Re: Mega-backdoor roth ira conversion with one check

Post by retiredjg » Wed Jul 25, 2018 7:58 am

international001 wrote:
Wed Jul 25, 2018 3:38 am
This seems just a little technicality about how to do the intermediate steps. So 2014-54 doesn't really allow you to achieve anything different as *end result* ?
What 2014-54 did was clarify what 401k plans had been doing for many years. Before 2014-54, some plans would split the rollover and some would not. For example Earl Lemongrab's plan would not split the rollover so many separate steps had to be taken to get the money to where he wanted it.

Splitting an account that contains already taxed money and not yet taxed money makes perfect sense and that's what many plans did. The trouble was this seemed to run contrary to one of the timing requirements of how distributions were done. So some companies did not split the distribution. It was a bit of a mess. 2014-54 just made it clear that the split rollover was allowed (an I think it also said it had to be done if the employee requested it).

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Earl Lemongrab
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Re: Mega-backdoor roth ira conversion with one check

Post by Earl Lemongrab » Wed Jul 25, 2018 11:01 am

There was another way that some people used to split rollovers in the old days. You would take the after-tax as a check to yourself, and the earnings as a rollover into a TIRA. Many plans, including Megacorp, supported that. You would then do a 60-day rollover into a Roth with the funds paid to you. Because it was all after-tax, there was no withholding.

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Mon Nov 04, 2019 6:37 am

(BUMP)

This year I want to receive 2 checks from Fidelity 401k after-tax, one with earnings, one with contributions

When I send them to Vanguard, can I send the two checks with one letter of instructions in the same envelope? Or shoud I separate them in 2 envelopes each with one instruction letter?

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Tamarind
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Re: Mega-backdoor roth ira conversion with one check

Post by Tamarind » Mon Nov 04, 2019 6:54 am

international001 wrote:
Mon Nov 04, 2019 6:37 am
(BUMP)

This year I want to receive 2 checks from Fidelity 401k after-tax, one with earnings, one with contributions

When I send them to Vanguard, can I send the two checks with one letter of instructions in the same envelope? Or shoud I separate them in 2 envelopes each with one instruction letter?
Are you trying to save the price of postage? I suggest you send them separately to remove all possibility of confusion regarding which check to execute which instructions for.

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Mon Nov 04, 2019 7:41 am

Yes.. I'm cheap

But also to simplify things. Why is confusing if you tell them amount X into account Y?

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Re: Mega-backdoor roth ira conversion with one check

Post by anon_investor » Mon Nov 04, 2019 8:01 am

international001 wrote:
Mon Nov 04, 2019 7:41 am
Yes.. I'm cheap

But also to simplify things. Why is confusing if you tell them amount X into account Y?
That will increase then chances of someone messing up, to save what? 50 cents?

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Re: Mega-backdoor roth ira conversion with one check

Post by retiredjg » Mon Nov 04, 2019 8:08 am

Won't each check be made out to the account you want the money to go into?

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Mon Nov 04, 2019 8:47 am

Don't know. Last year I did a rollover of everything into roth.

I got a check payable to

VANGUARD TR ROTH IRA
FBO: <myself>

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Re: Mega-backdoor roth ira conversion with one check

Post by retiredjg » Mon Nov 04, 2019 9:04 am

It is my understanding that you should get two checks - 1 made out to your Roth IRA and 1 made out to your tIRA. If that is what you get, I would think 1 envelope would do. I'd do a separate letter for each one and attach the check to it's own letter - in case the checks end up going in different directions at some point.

However, I understand that some custodians will do 1 check made out to your IRA and one check made out to you. If that is what you get, the check made out to you will have to be handled with a 60 day rollover. This would be handled differently.

It is unclear from earlier posts if your custodian will do two checks to two different IRAs. Determine that first.

Why have you decided to do it this way this next year?

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international001
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Re: Mega-backdoor roth ira conversion with one check

Post by international001 » Thu Nov 07, 2019 6:23 pm

This is for 2019, and I didn't get the checks yet

From Vanguard's response, you can add two checks in the same envelope. But the interesting thing, is that the letter is optional (it's what I did last year). There is a way of doing an official Purchase form from their website. So I guess I can just do create 2 Purchase forms and include them with the two checks in one envelope.

Following, the message I got from Vanguard

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If your rollover checks were made payable to Vanguard, you will not need to
endorse the checks. Please send us the checks, along with a purchase form
for each that can be printed from our website.

Please note, checks sent for deposit in your Vanguard Brokerage Account
will be deposited into your Vanguard Federal Money Market Fund (also known
as your settlement fund). You can allocate the assets to other investments
online or by phone after the money has settled. We are not able to accept
any instructions via email or fax to buy, sell, or exchange assets within
your Vanguard account.

If you would like to send a letter of instruction in addition to the
purchase form, you can submit one letter. Please be sure to clearly
identify each check, your Vanguard account number that check is to be
deposited in, and any important additional information. Regardless of which
instruction method you choose, the letter or purchase forms may be included
with both checks in one envelope.

>>> Creating a Purchase form

To create a purchase form, please use the instructions below:

1. Log on to your account.
2. From the "My Accounts" dropdown, select "Buy & sell."
3. Select “Contribute to IRA.”
4. Under the applicable IRA, choose “Yes” under the question “Is this a
rollover from an employer-sponsored plan or IRA?”
5. Select your Vanguard Federal Money Market Fund (settlement fund), enter
the dollar amount you'd like to purchase, and select "Continue."
6. From the dropdown menu, indicate that you'll be sending Vanguard a
check, and select "Continue."
7. Print the form that appears after you select "Submit." The mailing
address will be included on the purchase form.


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retiredjg
Posts: 38129
Joined: Thu Jan 10, 2008 12:56 pm

Re: Mega-backdoor roth ira conversion with one check

Post by retiredjg » Fri Nov 08, 2019 7:48 am

Let us know how it goes.

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