ROTH 401K funds into plan with only 401K option

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TnGuy
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ROTH 401K funds into plan with only 401K option

Post by TnGuy » Wed Dec 06, 2017 10:14 am

Hello:

My wife's company has been taken over by another one. Her current company offers both 401K and ROTH 401K options and we have invested in both over time. The new company (sadly) only offers a 401K option - no ROTH. The funds from her existing retirement plan will be transferred beginning January 1st to the new 401K-only plan. Does anyone how what happens to the ROTH 401K portion of the funds in a situation such as this - where it will be transferred to a plan with only a 401K option? Thank you.


David
"Money will not make you happy. And happy will not make you money." - Groucho Marx

livesoft
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Re: ROTH 401K funds into plan with only 401K option

Post by livesoft » Wed Dec 06, 2017 10:16 am

Only good things can happen, so I wouldn't worry about it.

My spouse's company was sold and she was able to rollover her 401(k) there to an IRA where she could get low-expense-ratio, passively-managed index funds instead of the craptacular funds in the 401(k) with expense ratios of 2%.
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TnGuy
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Re: ROTH 401K funds into plan with only 401K option

Post by TnGuy » Wed Dec 06, 2017 11:56 am

My question is about what becomes of the after-tax ROTH 401K funds when they move over into the new plan that has a pre-tax 401K option? How are those funds now handled in a plan that has no ROTH 401K option for them to transfer directly into?


David
"Money will not make you happy. And happy will not make you money." - Groucho Marx

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Watty
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Re: ROTH 401K funds into plan with only 401K option

Post by Watty » Wed Dec 06, 2017 12:00 pm

It would be best to call the HR department and ask.

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David Jay
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Re: ROTH 401K funds into plan with only 401K option

Post by David Jay » Wed Dec 06, 2017 12:12 pm

TnGuy wrote:
Wed Dec 06, 2017 11:56 am
My question is about what becomes of the after-tax ROTH 401K funds when they move over into the new plan that has a pre-tax 401K option? How are those funds now handled in a plan that has no ROTH 401K option for them to transfer directly into?


David
As "Watty" said, contact HR.

But beyond that, because it is an ERISA plan, I am confident that the law will protect those assets. I believe that is why "livesoft" said that "only good things can happen".

My guess is that the new custodian will either continue to hold those after tax funds (but not allow any additional contributions) and/or allow a rollover of the funds into a personal Roth.
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flamesabers
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Re: ROTH 401K funds into plan with only 401K option

Post by flamesabers » Wed Dec 06, 2017 4:41 pm

TnGuy wrote:
Wed Dec 06, 2017 11:56 am
My question is about what becomes of the after-tax ROTH 401K funds when they move over into the new plan that has a pre-tax 401K option? How are those funds now handled in a plan that has no ROTH 401K option for them to transfer directly into?
My guess would be that the plan administrator would require you to move the Roth 401k balance into a Roth IRA. However, as others have said, the only way to know for sure is to contact HR directly.

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