Differentiate Pretax and Roth investments inside 403b or 401k

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curryitr
Posts: 47
Joined: Fri Jan 04, 2019 8:29 am

Differentiate Pretax and Roth investments inside 403b or 401k

Post by curryitr » Fri Feb 14, 2020 5:56 am

Hello!

I know that more than likely I will have to contact my plan provider to know the answer my question for certain but here it goes... For those of us who contribute to a Roth 401k or 403b the employer match and contributions go into the plan as pre-tax instead of Roth. For those of you with this type of situation does your employer let you change the asset allocation of the pre-tax funds separately from the Roth or post tax funds? For example I would like to allocate my pre-tax employer match and contributions as bond funds while leaving the Roth funds invested in equities. However, right now while I can view the pre-tax and Roth balances I think that the asset allocation of the entire 403b is spread across both of those contribution classes.

Thanks!

alexkass
Posts: 8
Joined: Sun Mar 16, 2008 2:24 pm

Re: Differentiate Pretax and Roth investments inside 403b or 401k

Post by alexkass » Fri Feb 14, 2020 6:31 am

My employer does not allow distinct allocations: they keep track of how much is roth of course, but you cannot set distinct allocations. I think that supporting only one allocation across the 401k is typical.

I

retiredjg
Posts: 39368
Joined: Thu Jan 10, 2008 12:56 pm

Re: Differentiate Pretax and Roth investments inside 403b or 401k

Post by retiredjg » Fri Feb 14, 2020 7:26 am

curryitr wrote:
Fri Feb 14, 2020 5:56 am
However, right now while I can view the pre-tax and Roth balances I think that the asset allocation of the entire 403b is spread across both of those contribution classes.
That is common.

Monster99
Posts: 272
Joined: Tue Aug 29, 2017 10:28 am

Re: Differentiate Pretax and Roth investments inside 403b or 401k

Post by Monster99 » Fri Feb 14, 2020 9:27 am

alexkass wrote:
Fri Feb 14, 2020 6:31 am
My employer does not allow distinct allocations: they keep track of how much is roth of course, but you cannot set distinct allocations. I think that supporting only one allocation across the 401k is typical.

I
My 401k is the same - no distinct allocation. Currently I hold my bonds in the 401k and I have a small roth 401k portion. May roll out the roth to my Vanguard account so I can allocate more stock in the tax free account....

Alan S.
Posts: 9128
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Differentiate Pretax and Roth investments inside 403b or 401k

Post by Alan S. » Fri Feb 14, 2020 9:40 am

Monster99 wrote:
Fri Feb 14, 2020 9:27 am
alexkass wrote:
Fri Feb 14, 2020 6:31 am
My employer does not allow distinct allocations: they keep track of how much is roth of course, but you cannot set distinct allocations. I think that supporting only one allocation across the 401k is typical.

I
My 401k is the same - no distinct allocation. Currently I hold my bonds in the 401k and I have a small roth 401k portion. May roll out the roth to my Vanguard account so I can allocate more stock in the tax free account....
And you have to be at least 59.5 to do that, if still working there. Some plans will not even allow an in-service rollover then.
But if your plan allows after tax non Roth contributions AND allows rollout to your Roth IRA (mega back door Roth), you will be able to evade the age 59.5 requirement for your after tax contributions and their earnings.

Monster99
Posts: 272
Joined: Tue Aug 29, 2017 10:28 am

Re: Differentiate Pretax and Roth investments inside 403b or 401k

Post by Monster99 » Fri Feb 14, 2020 9:53 am

I retired in 2017 and age 63 - no new contributions to the 401k. I still have the account because the fund has low cost index funds and a reasonable stable value option. I may roll it over to Vanguard or Schwab at some point but it is very easy to convert to the roth until I hit 72....

KineticSync
Posts: 14
Joined: Tue Jan 15, 2019 11:22 am

Re: Differentiate Pretax and Roth investments inside 403b or 401k

Post by KineticSync » Fri Feb 14, 2020 11:11 am

401k managed through Fidelity and I have to go into a low level report to differentiate the Roth 401k from the after tax to the pretax. No ability to set separate funding--Roth in-plan rollovers is considered to be in the same funding group as my and the employer's pretax contributions. This is a biggish annoyance since I'd like to go high equities for the Roth. Current plan is to accumulate a bit and roll it over into my other Roth.

GAAP
Posts: 1051
Joined: Fri Apr 08, 2016 12:41 pm

Re: Differentiate Pretax and Roth investments inside 403b or 401k

Post by GAAP » Fri Feb 14, 2020 12:39 pm

My prior employer's plan allowed for specifying investment choices by source -- but that meant that all of the possible sources had to be specified (matched vs unmatched, employer vs. employee, Roth vs traditional, after-tax vs. before tax, employer profit sharing, QNEC, catch-up), in all of their combinations, including prior-company funds from mergers. That was way more work than I ever wanted to deal with.
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee

helloeveryone
Posts: 407
Joined: Sun Sep 04, 2016 5:16 pm

Re: Differentiate Pretax and Roth investments inside 403b or 401k

Post by helloeveryone » Fri Feb 14, 2020 2:24 pm

curryitr wrote:
Fri Feb 14, 2020 5:56 am
Hello!

I know that more than likely I will have to contact my plan provider to know the answer my question for certain but here it goes... For those of us who contribute to a Roth 401k or 403b the employer match and contributions go into the plan as pre-tax instead of Roth. For those of you with this type of situation does your employer let you change the asset allocation of the pre-tax funds separately from the Roth or post tax funds? For example I would like to allocate my pre-tax employer match and contributions as bond funds while leaving the Roth funds invested in equities. However, right now while I can view the pre-tax and Roth balances I think that the asset allocation of the entire 403b is spread across both of those contribution classes.

Thanks!
Yes but you have to call. We have fidelity and I couldn’t do it online for whatever reason even though it gives you the balance in each on the website. But it was easy to do over the phone.

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CalculatedRisk
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Re: Differentiate Pretax and Roth investments inside 403b or 401k

Post by CalculatedRisk » Fri Feb 14, 2020 2:36 pm

I have an old Schwab 401k where I was able to do this (I think).

The online 401k gave me the option to open two self-directed accounts and specify whether to move pre-tax or Roth funds from the main account into each of the self-directed accounts. I moved all Roth funds to a self-directed account, then called in to confirm. Turns out all funds were still being invested pro rata because of a bug in their system (or so they said). I spoke with several levels of support, until they claimed to have it sorted out. The Roth funds (total US) have grown significantly since then (in the past 2 years) as compared to the pre-tax funds (total bonds). I should probably call back in and re-confirm they were actually able to do it...

Edit: I just logged into my Schwab account and confirmed that the value of the "Employee Roth 401k" contributions are what I expected them to be. Schwab is reporting 4.59% rate of return for 2020 for my Roth funds and 1.18% rate of return for 2020 for my pre-tax funds (independent of which funds are in which self-directed account).

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