Pretax TIRA funds rolled into 401k, am I good to do the Roth Conversion?

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Topic Author
JustinR
Posts: 1114
Joined: Tue Apr 27, 2010 11:43 pm

Pretax TIRA funds rolled into 401k, am I good to do the Roth Conversion?

Post by JustinR » Wed Mar 13, 2019 3:25 am

Vanguard sent me a check with the pretax portion of my Tira. I deposited it in my 401k via mobile app. The transaction shows up in my 401k with shares bought from the funds deposited.

Only after tax funds remains in my Tira (from a Roth IRA recharacterization). Am I good to do the conversion now or is there anything to wait for?

Silk McCue
Posts: 3251
Joined: Thu Feb 25, 2016 7:11 pm

Re: Pretax TIRA funds rolled into 401k, am I good to do the Roth Conversion?

Post by Silk McCue » Wed Mar 13, 2019 8:38 am

Nothing to wait for. The requirement to avoid the pro rata rule is have $0 in tax deferred IRA by 12/31/2019.

Complete the Backdoor Roth at will.

Cheers

Alan S.
Posts: 8655
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Pretax TIRA funds rolled into 401k, am I good to do the Roth Conversion?

Post by Alan S. » Wed Mar 13, 2019 10:00 am

JustinR wrote:
Wed Mar 13, 2019 3:25 am
Vanguard sent me a check with the pretax portion of my Tira. I deposited it in my 401k via mobile app. The transaction shows up in my 401k with shares bought from the funds deposited.

Only after tax funds remains in my Tira (from a Roth IRA recharacterization). Am I good to do the conversion now or is there anything to wait for?
Just wondering how final the rollover is when the plan administrator is not processing the contribution of a direct rollover check, rather you were able to deposit it yourself using the app. There might be some sort of review process before the deposit is officially accepted. If there is any doubt in your mind about this, might be wise to call them before converting just to be sure there is no review yet to be done since no recharacterization of your conversion is possible.

Am all for converting ASAP, but not as comfortable with the mobile app deposit.

Silk McCue
Posts: 3251
Joined: Thu Feb 25, 2016 7:11 pm

Re: Pretax TIRA funds rolled into 401k, am I good to do the Roth Conversion?

Post by Silk McCue » Wed Mar 13, 2019 10:25 am

Alan S. wrote:
Wed Mar 13, 2019 10:00 am
Am all for converting ASAP, but not as comfortable with the mobile app deposit.
I always appreciate your exceptional knowledge on these topics and have learned from your posts.

Is your concern that they will treat it as a contribution rather than a Rollover and that that wouldn't be able to be fixed? I woudn't think that would be an issue as the check is from Vanguard and is not different than mailing in the VG check to them. In that case they would be able to perform the Backdoor immediately.

Of course there is no harm by waiting a few days to make certain nothing goes awry.

Cheers

Alan S.
Posts: 8655
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Pretax TIRA funds rolled into 401k, am I good to do the Roth Conversion?

Post by Alan S. » Wed Mar 13, 2019 12:01 pm

Silk McCue wrote:
Wed Mar 13, 2019 10:25 am
Alan S. wrote:
Wed Mar 13, 2019 10:00 am
Am all for converting ASAP, but not as comfortable with the mobile app deposit.
I always appreciate your exceptional knowledge on these topics and have learned from your posts.

Is your concern that they will treat it as a contribution rather than a Rollover and that that wouldn't be able to be fixed? I woudn't think that would be an issue as the check is from Vanguard and is not different than mailing in the VG check to them. In that case they would be able to perform the Backdoor immediately.

Of course there is no harm by waiting a few days to make certain nothing goes awry.

Cheers
Silk, just a general concern given that there have been misunderstandings over whether a plan will accept rollovers from non rollover IRA accounts, and if they clearly disclosed that up front. This IRA was not a rollover IRA and was deposited with a mobile app. In other words, concern that the plan might end up declining the IRA rollover and returning the funds, not treating it as some other kind of contribution. Usually, if any problem surfaces it will be communicated in a short period of time, typically 1-3 weeks.

Whether the OP wants to call the plan, just wait a couple weeks before converting, or take the small risk and convert immediately is his judgement call. If this had been a rollover IRA the risk of the plan declining the contribution after review would be much lower.

Topic Author
JustinR
Posts: 1114
Joined: Tue Apr 27, 2010 11:43 pm

Re: Pretax TIRA funds rolled into 401k, am I good to do the Roth Conversion?

Post by JustinR » Thu Mar 14, 2019 4:10 am

Alan S. wrote:
Wed Mar 13, 2019 10:00 am
JustinR wrote:
Wed Mar 13, 2019 3:25 am
Vanguard sent me a check with the pretax portion of my Tira. I deposited it in my 401k via mobile app. The transaction shows up in my 401k with shares bought from the funds deposited.

Only after tax funds remains in my Tira (from a Roth IRA recharacterization). Am I good to do the conversion now or is there anything to wait for?
Just wondering how final the rollover is when the plan administrator is not processing the contribution of a direct rollover check, rather you were able to deposit it yourself using the app. There might be some sort of review process before the deposit is officially accepted. If there is any doubt in your mind about this, might be wise to call them before converting just to be sure there is no review yet to be done since no recharacterization of your conversion is possible.

Am all for converting ASAP, but not as comfortable with the mobile app deposit.
Thanks for the concern.

It was through Fidelity and they have a very streamlined process for doing this. The deposit through the app wasn't a "deposit random check" thing, it was a specific step of the rollover process that the app guides you through.

After depositing the check, they apparently have a real person review it and then it's confirmed on the web. I also received an email titled "Confirmation of your rollover contribution."

Then I received a confirmation pdf of the shares being invested. The shares are listed in my 401k as "PRE-TAX ROLLOVER."

I'm pretty impressed at how easy Fidelity made this whole process. Everything is step by step.

I was pretty confident so I went ahead and called Vanguard to do the Roth conversion. That was really simple too.

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