Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

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corp_sharecropper
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Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by corp_sharecropper » Sun Nov 10, 2019 12:43 pm

I want to start backdooring into a Roth IRA. My plan is to contribute to the "after-tax" 401K that I'm offered through work (managed by Fidelity). I'm allowed quarterly, in-service, Roth conversions. However, I've recently discovered a fly in the ointment of my plans. I'm only allowed a single, "global", preference for what funds my contributions go toward. So basically, it doesn't matter whether I contribute to traditional 401K, Roth 401K, or After-tax 401k, the money all gets invested in the same allocations, just in different "accounts".

Ideally, I'd contribute a portion of every paycheck and my traditional 401K money would get invested in various funds while my after-tax contribution would be in cash/moneymarket until I converted to Roth IRA, in order to avoid issues with earnings upon conversion.

So what's the best move here? I really don't want to have to remember to log in and invest my traditional contribution every 2 weeks. I think that's a bad idea for me.

I don't really know how "bad" it would be to have earnings before Roth IRA conversion on a quarterly basis.

retiredjg
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by retiredjg » Sun Nov 10, 2019 12:50 pm

corp_sharecropper wrote:
Sun Nov 10, 2019 12:43 pm
I want to start backdooring into a Roth IRA. My plan is to contribute to the "after-tax" 401K that I'm offered through work (managed by Fidelity). I'm allowed quarterly, in-service, Roth conversions. However, I've recently discovered a fly in the ointment of my plans. I'm only allowed a single, "global", preference for what funds my contributions go toward. So basically, it doesn't matter whether I contribute to traditional 401K, Roth 401K, or After-tax 401k, the money all gets invested in the same allocations, just in different "accounts".
This is very common.
Ideally, I'd contribute a portion of every paycheck and my traditional 401K money would get invested in various funds while my after-tax contribution would be in cash/moneymarket until I converted to Roth IRA, in order to avoid issues with earnings upon conversion.
We have heard of a small handful of plans that do this - like 2 o r 3. Most do not.

So what's the best move here?
It seems to me your choice is to invest the after tax account like the rest of your plan or don't use the after-tax account.

I don't really know how "bad" it would be to have earnings before Roth IRA conversion on a quarterly basis.
That's pretty much what everybody else does so I would not be worried about it.

lakpr
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by lakpr » Sun Nov 10, 2019 1:53 pm

Are you allowed to rebalance after the contribution is made, based on the type of sub account (traditional vs Roth vs after tax)? It could be the case that *contributions* must be identical for all types, but rebalancing can be done as you like. ...

If allowed, then it is no big deal, you just need to manually invest after the contribution is made.

If not, well, I suppose you are stuck with paying tax on gains in the after tax account, if any, before the Roth conversion takes place. If there are any losses, well, make sure you do not convert everything to Roth, always leave a few dollars. Alan S. opined in another thread that, leaving a few dollars in the after tax account forces the plan to keep track of money flowing in and money flowing out in the after-tax sub account, thus you can "harvest" any losses to offset future gains. If you instead empty the account, the plan MAY reset the basis to zero.

Let us say you contributed $2000 to the after tax account. Let us assume the value dropped to $1975 before Roth conversion took place. Loss of $25.

In this case, convert up to $1950. Leave $25 in the account. The $25 is not going to become $50 by itself before you contribute the next batch of $2000 (that would be a 100% gain within just a few weeks, not gonna happen). If this combined balance of $2025 becomes $2050 before you convert to Roth, you had essentially erased the gain with past loss.

MathIsMyWayr
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by MathIsMyWayr » Sun Nov 10, 2019 2:03 pm

retiredjg wrote:
Sun Nov 10, 2019 12:50 pm
corp_sharecropper wrote:
Sun Nov 10, 2019 12:43 pm
I want to start backdooring into a Roth IRA. My plan is to contribute to the "after-tax" 401K that I'm offered through work (managed by Fidelity). I'm allowed quarterly, in-service, Roth conversions. However, I've recently discovered a fly in the ointment of my plans. I'm only allowed a single, "global", preference for what funds my contributions go toward. So basically, it doesn't matter whether I contribute to traditional 401K, Roth 401K, or After-tax 401k, the money all gets invested in the same allocations, just in different "accounts".
This is very common.
Ideally, I'd contribute a portion of every paycheck and my traditional 401K money would get invested in various funds while my after-tax contribution would be in cash/moneymarket until I converted to Roth IRA, in order to avoid issues with earnings upon conversion.
We have heard of a small handful of plans that do this - like 2 o r 3. Most do not.

So what's the best move here?
It seems to me your choice is to invest the after tax account like the rest of your plan or don't use the after-tax account.

I don't really know how "bad" it would be to have earnings before Roth IRA conversion on a quarterly basis.
That's pretty much what everybody else does so I would not be worried about it.
+1
My 401(k) plan is also at Fidelity including after-tax contribution. Investment-wise, they all share the investments and same between regular 401(k) and after-tax Roth 401(k). I am grateful for the after-tax option and would not worry about little things.

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firebirdparts
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by firebirdparts » Sun Nov 10, 2019 3:08 pm

Same here. Fido treats the money as one big pile that has taxability measured in percents.
A fool and your money are soon partners

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1789
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by 1789 » Sun Nov 10, 2019 5:17 pm

corp_sharecropper wrote:
Sun Nov 10, 2019 12:43 pm
I want to start backdooring into a Roth IRA. My plan is to contribute to the "after-tax" 401K that I'm offered through work (managed by Fidelity). I'm allowed quarterly, in-service, Roth conversions. However, I've recently discovered a fly in the ointment of my plans. I'm only allowed a single, "global", preference for what funds my contributions go toward. So basically, it doesn't matter whether I contribute to traditional 401K, Roth 401K, or After-tax 401k, the money all gets invested in the same allocations, just in different "accounts".

Ideally, I'd contribute a portion of every paycheck and my traditional 401K money would get invested in various funds while my after-tax contribution would be in cash/moneymarket until I converted to Roth IRA, in order to avoid issues with earnings upon conversion.

So what's the best move here? I really don't want to have to remember to log in and invest my traditional contribution every 2 weeks. I think that's a bad idea for me.

I don't really know how "bad" it would be to have earnings before Roth IRA conversion on a quarterly basis.
Can you do roth in plan conversions every paycheck automatically? This way there will not be any taxes. Since your plan allows in service distributions quarterly you can take this money to your Roth ira including earnings that you got after the money is in Roth 401k bucket (your after tax converted money to roth 401k will sit at a different sub Roth 401k bucket). If your Roth ira is at Fidelity there is a chance that they will rollover the funds to ira “in kind”. If your Roth ira is at another company then they will sell the funds and send the rollover check to another company. I would do this once a year after. Let me know if i am missing anything here.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

anon_investor
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by anon_investor » Sun Nov 10, 2019 6:27 pm

1789 wrote:
Sun Nov 10, 2019 5:17 pm
corp_sharecropper wrote:
Sun Nov 10, 2019 12:43 pm
I want to start backdooring into a Roth IRA. My plan is to contribute to the "after-tax" 401K that I'm offered through work (managed by Fidelity). I'm allowed quarterly, in-service, Roth conversions. However, I've recently discovered a fly in the ointment of my plans. I'm only allowed a single, "global", preference for what funds my contributions go toward. So basically, it doesn't matter whether I contribute to traditional 401K, Roth 401K, or After-tax 401k, the money all gets invested in the same allocations, just in different "accounts".

Ideally, I'd contribute a portion of every paycheck and my traditional 401K money would get invested in various funds while my after-tax contribution would be in cash/moneymarket until I converted to Roth IRA, in order to avoid issues with earnings upon conversion.

So what's the best move here? I really don't want to have to remember to log in and invest my traditional contribution every 2 weeks. I think that's a bad idea for me.

I don't really know how "bad" it would be to have earnings before Roth IRA conversion on a quarterly basis.
Can you do roth in plan conversions every paycheck automatically? This way there will not be any taxes. Since your plan allows in service distributions quarterly you can take this money to your Roth ira including earnings that you got after the money is in Roth 401k bucket (your after tax converted money to roth 401k will sit at a different sub Roth 401k bucket). If your Roth ira is at Fidelity there is a chance that they will rollover the funds to ira “in kind”. If your Roth ira is at another company then they will sell the funds and send the rollover check to another company. I would do this once a year after. Let me know if i am missing anything here.
+1 on the in plan roth conversion if available. My 401k is not at Fido but has the same issue of everything invested all the same regardless if its trad/roth/after tax. I am able to do in plan roth conversion after each contribution to avoid build up of growth on the after tax funds before it is converted to roth.

nolesrule
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by nolesrule » Sun Nov 10, 2019 6:41 pm

It's not the end of the world to pay some taxes on the short-term growth. How much are those contributions really going to grow in 3 months?

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FiveK
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by FiveK » Sun Nov 10, 2019 9:42 pm

corp_sharecropper wrote:
Sun Nov 10, 2019 12:43 pm
I don't really know how "bad" it would be to have earnings before Roth IRA conversion on a quarterly basis.
Not bad at all. Would you rather pay no tax and convert a smaller amount, or pay a little tax in return for converting a larger amount?

ryman554
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by ryman554 » Mon Nov 11, 2019 9:09 am

FiveK wrote:
Sun Nov 10, 2019 9:42 pm
corp_sharecropper wrote:
Sun Nov 10, 2019 12:43 pm
I don't really know how "bad" it would be to have earnings before Roth IRA conversion on a quarterly basis.
Not bad at all. Would you rather pay no tax and convert a smaller amount, or pay a little tax in return for converting a larger amount?
While I agree that is it "not bad" and really a "first world problem" to have, you are slightly minimizing the badness.

It's an in-plan conversion quarterly instead of an "instant" conversion (done manually). Thus we can infer that the investments would be the same, modulo a day or so if the OP is watching.

Thus, the proper comparison is "Would you rather pay no tax or pay a little tax in return for converting the same amount?" Everybody would love the no tax, but the reality is the little tax is still pretty little in the grand scheme of things.

To make the calculation for the OP: let's assume that OP is putting 58k total into 401(k), 19 in the pre-tax and 38 in the after-tax. Let's even assume the 38k comes from a bonus all at once at the beginning of the quarter, so the OP has to wait the full 3 months to covert. Let's also assume a pretty good quarter -- 5% growth. Let's call it 2k of growth in the after-tax account. Let's also assume the OP has high income: otherwise the after-tax isn't really an option, and lives in a high-state-tax state. Let's call the OP in the 24% tax bracket, 10% state. The NIIT doesn't apply here. So, the OP would be taxed on 34% of the 2k of growth. Let's call that $700.

So, in a "worst" case (taxes, not investments), the OP is out $700 per year. Under more reasonable assumptions of spreading the after tax out and 2% growth rate per quarter, you're looking at about $100.

Don't let that stop you from investing in after-tax if you can afford it. If you can afford it, you can cash-flow the potential tax hit, too.

Topic Author
corp_sharecropper
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by corp_sharecropper » Mon Nov 11, 2019 7:04 pm

1789 wrote:
Sun Nov 10, 2019 5:17 pm
corp_sharecropper wrote:
Sun Nov 10, 2019 12:43 pm
I want to start backdooring into a Roth IRA. My plan is to contribute to the "after-tax" 401K that I'm offered through work (managed by Fidelity). I'm allowed quarterly, in-service, Roth conversions. However, I've recently discovered a fly in the ointment of my plans. I'm only allowed a single, "global", preference for what funds my contributions go toward. So basically, it doesn't matter whether I contribute to traditional 401K, Roth 401K, or After-tax 401k, the money all gets invested in the same allocations, just in different "accounts".

Ideally, I'd contribute a portion of every paycheck and my traditional 401K money would get invested in various funds while my after-tax contribution would be in cash/moneymarket until I converted to Roth IRA, in order to avoid issues with earnings upon conversion.

So what's the best move here? I really don't want to have to remember to log in and invest my traditional contribution every 2 weeks. I think that's a bad idea for me.

I don't really know how "bad" it would be to have earnings before Roth IRA conversion on a quarterly basis.
Can you do roth in plan conversions every paycheck automatically? This way there will not be any taxes. Since your plan allows in service distributions quarterly you can take this money to your Roth ira including earnings that you got after the money is in Roth 401k bucket (your after tax converted money to roth 401k will sit at a different sub Roth 401k bucket). If your Roth ira is at Fidelity there is a chance that they will rollover the funds to ira “in kind”. If your Roth ira is at another company then they will sell the funds and send the rollover check to another company. I would do this once a year after. Let me know if i am missing anything here.
I'm a little confused by this.

I was asking about converting after-tax 401k to Roth IRA, nothing to do with Roth 401K (at least I think so, I'm still learning).

Yes, I plan to open the Roth IRA at Fidelity, I presume there will be some convenience by having it there.

I can't do it automatically or every paycheck. The 401K SPD says it allows quarterly Roth conversions and I don't think there are any settings for having it occur automatically.

Am I misunderstanding what you wrote? Along with the mention of Roth 401K, for some reason the word "withdrawal" is confusing me, I keep using the words "in-service conversion" but maybe we're referring to the same thing?

lakpr
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by lakpr » Mon Nov 11, 2019 7:36 pm

corp_sharecropper wrote:
Mon Nov 11, 2019 7:04 pm
I'm a little confused by this.

I was asking about converting after-tax 401k to Roth IRA, nothing to do with Roth 401K (at least I think so, I'm still learning).

Yes, I plan to open the Roth IRA at Fidelity, I presume there will be some convenience by having it there.

I can't do it automatically or every paycheck. The 401K SPD says it allows quarterly Roth conversions and I don't think there are any settings for having it occur automatically.

Am I misunderstanding what you wrote? Along with the mention of Roth 401K, for some reason the word "withdrawal" is confusing me, I keep using the words "in-service conversion" but maybe we're referring to the same thing?
Mega Backdoor Roth come in two flavors.
1. After tax contributions --> Roth 401k bucket within the plan
2. After tax contributions --> external Roth IRA (outside of the plan)

For practical purposes, there is no difference between the two (well, except that in Roth 401k you will not be able to withdraw money as you can with Roth IRA, but assuming here that's a non-factor).

Some (many?) plans allow (1) to be done almost instantly, Fidelity is especially good at this and offers automatic conversion from after-tax to Roth 401k within the plan. Which is where 1789's question is coming from.

Of course, the plan's Summary Plan Document has to specify the frequency of conversion -- which, based on your reply, seems to be that it's allowed either within the plan or to external IRA, only once a quarter.

JediMisty
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by JediMisty » Mon Nov 11, 2019 7:58 pm

lakpr wrote:
Sun Nov 10, 2019 1:53 pm
Are you allowed to rebalance after the contribution is made, based on the type of sub account (traditional vs Roth vs after tax)? It could be the case that *contributions* must be identical for all types, but rebalancing can be done as you like. ...

If allowed, then it is no big deal, you just need to manually invest after the contribution is made.

If not, well, I suppose you are stuck with paying tax on gains in the after tax account, if any, before the Roth conversion takes place. If there are any losses, well, make sure you do not convert everything to Roth, always leave a few dollars. Alan S. opined in another thread that, leaving a few dollars in the after tax account forces the plan to keep track of money flowing in and money flowing out in the after-tax sub account, thus you can "harvest" any losses to offset future gains. If you instead empty the account, the plan MAY reset the basis to zero.

Let us say you contributed $2000 to the after tax account. Let us assume the value dropped to $1975 before Roth conversion took place. Loss of $25.

In this case, convert up to $1950. Leave $25 in the account. The $25 is not going to become $50 by itself before you contribute the next batch of $2000 (that would be a 100% gain within just a few weeks, not gonna happen). If this combined balance of $2025 becomes $2050 before you convert to Roth, you had essentially erased the gain with past loss.
This is genius! I convert the next day, but have gotten stuck with losses that are not offset by gains because I've converted every penny of after tax to Roth each paycheck.

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1789
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by 1789 » Mon Nov 11, 2019 9:30 pm

lakpr wrote:
Mon Nov 11, 2019 7:36 pm
corp_sharecropper wrote:
Mon Nov 11, 2019 7:04 pm
I'm a little confused by this.

I was asking about converting after-tax 401k to Roth IRA, nothing to do with Roth 401K (at least I think so, I'm still learning).

Yes, I plan to open the Roth IRA at Fidelity, I presume there will be some convenience by having it there.

I can't do it automatically or every paycheck. The 401K SPD says it allows quarterly Roth conversions and I don't think there are any settings for having it occur automatically.

Am I misunderstanding what you wrote? Along with the mention of Roth 401K, for some reason the word "withdrawal" is confusing me, I keep using the words "in-service conversion" but maybe we're referring to the same thing?
Mega Backdoor Roth come in two flavors.
1. After tax contributions --> Roth 401k bucket within the plan
2. After tax contributions --> external Roth IRA (outside of the plan)

For practical purposes, there is no difference between the two (well, except that in Roth 401k you will not be able to withdraw money as you can with Roth IRA, but assuming here that's a non-factor).

Some (many?) plans allow (1) to be done almost instantly, Fidelity is especially good at this and offers automatic conversion from after-tax to Roth 401k within the plan. Which is where 1789's question is coming from.

Of course, the plan's Summary Plan Document has to specify the frequency of conversion -- which, based on your reply, seems to be that it's allowed either within the plan or to external IRA, only once a quarter.
lakpr

Why not this one?

3) After tax contributions —> Roth 401k sub bucket —> Roth IRA.

This includes contributions and earnings in that sub bucket. From my understanding OP can do this every 3 months if in plan conversions allowed. I recommended once a year as i am a lazy person.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

lakpr
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by lakpr » Tue Nov 12, 2019 5:35 am

1789 wrote:
Mon Nov 11, 2019 9:30 pm
lakpr

Why not this one?

3) After tax contributions —> Roth 401k sub bucket —> Roth IRA.

This includes contributions and earnings in that sub bucket. From my understanding OP can do this every 3 months if in plan conversions allowed. I recommended once a year as i am a lazy person.
Yes that is possible too. But keeping money in the 401k plan might be better than rolling over to an external IRA, since 401k plans provide you "non-alienation" creditor protections of ERISA for free. Why give up a freebie benefit?

Depends on the state laws of course.

nolesrule
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by nolesrule » Tue Nov 12, 2019 8:53 am

1789 wrote:
Mon Nov 11, 2019 9:30 pm
lakpr wrote:
Mon Nov 11, 2019 7:36 pm
corp_sharecropper wrote:
Mon Nov 11, 2019 7:04 pm
I'm a little confused by this.

I was asking about converting after-tax 401k to Roth IRA, nothing to do with Roth 401K (at least I think so, I'm still learning).

Yes, I plan to open the Roth IRA at Fidelity, I presume there will be some convenience by having it there.

I can't do it automatically or every paycheck. The 401K SPD says it allows quarterly Roth conversions and I don't think there are any settings for having it occur automatically.

Am I misunderstanding what you wrote? Along with the mention of Roth 401K, for some reason the word "withdrawal" is confusing me, I keep using the words "in-service conversion" but maybe we're referring to the same thing?
Mega Backdoor Roth come in two flavors.
1. After tax contributions --> Roth 401k bucket within the plan
2. After tax contributions --> external Roth IRA (outside of the plan)

For practical purposes, there is no difference between the two (well, except that in Roth 401k you will not be able to withdraw money as you can with Roth IRA, but assuming here that's a non-factor).

Some (many?) plans allow (1) to be done almost instantly, Fidelity is especially good at this and offers automatic conversion from after-tax to Roth 401k within the plan. Which is where 1789's question is coming from.

Of course, the plan's Summary Plan Document has to specify the frequency of conversion -- which, based on your reply, seems to be that it's allowed either within the plan or to external IRA, only once a quarter.
lakpr

Why not this one?

3) After tax contributions —> Roth 401k sub bucket —> Roth IRA.

This includes contributions and earnings in that sub bucket. From my understanding OP can do this every 3 months if in plan conversions allowed. I recommended once a year as i am a lazy person.
Generally, once the money has been converted to Roth 401k, it is subject to the same withdrawal rules as money that was directly contributed to the Roth 401k, and no longer subject to non-Roth after-tax withdrawal rules. That usually means the money is "stuck" in the plan until separation of service or you've reached the age you can withdraw the funds.

retiredjg
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by retiredjg » Tue Nov 12, 2019 9:36 am

nolesrule wrote:
Tue Nov 12, 2019 8:53 am
Generally, once the money has been converted to Roth 401k, it is subject to the same withdrawal rules as money that was directly contributed to the Roth 401k, and no longer subject to non-Roth after-tax withdrawal rules. That usually means the money is "stuck" in the plan until separation of service or you've reached the age you can withdraw the funds.
I believe Alan S and Spirit Rider have told us it is distributable prior to separation.

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1789
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by 1789 » Tue Nov 12, 2019 10:03 am

nolesrule wrote:
Tue Nov 12, 2019 8:53 am
1789 wrote:
Mon Nov 11, 2019 9:30 pm
lakpr wrote:
Mon Nov 11, 2019 7:36 pm
corp_sharecropper wrote:
Mon Nov 11, 2019 7:04 pm
I'm a little confused by this.

I was asking about converting after-tax 401k to Roth IRA, nothing to do with Roth 401K (at least I think so, I'm still learning).

Yes, I plan to open the Roth IRA at Fidelity, I presume there will be some convenience by having it there.

I can't do it automatically or every paycheck. The 401K SPD says it allows quarterly Roth conversions and I don't think there are any settings for having it occur automatically.

Am I misunderstanding what you wrote? Along with the mention of Roth 401K, for some reason the word "withdrawal" is confusing me, I keep using the words "in-service conversion" but maybe we're referring to the same thing?
Mega Backdoor Roth come in two flavors.
1. After tax contributions --> Roth 401k bucket within the plan
2. After tax contributions --> external Roth IRA (outside of the plan)

For practical purposes, there is no difference between the two (well, except that in Roth 401k you will not be able to withdraw money as you can with Roth IRA, but assuming here that's a non-factor).

Some (many?) plans allow (1) to be done almost instantly, Fidelity is especially good at this and offers automatic conversion from after-tax to Roth 401k within the plan. Which is where 1789's question is coming from.

Of course, the plan's Summary Plan Document has to specify the frequency of conversion -- which, based on your reply, seems to be that it's allowed either within the plan or to external IRA, only once a quarter.
lakpr

Why not this one?

3) After tax contributions —> Roth 401k sub bucket —> Roth IRA.

This includes contributions and earnings in that sub bucket. From my understanding OP can do this every 3 months if in plan conversions allowed. I recommended once a year as i am a lazy person.
Generally, once the money has been converted to Roth 401k, it is subject to the same withdrawal rules as money that was directly contributed to the Roth 401k, and no longer subject to non-Roth after-tax withdrawal rules. That usually means the money is "stuck" in the plan until separation of service or you've reached the age you can withdraw the funds.
This is not true, at least for my plan. It is not mixed to original Roth 401k bucket. So this should be no issue to roll out to Roth Ira.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

nolesrule
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Re: Dilemma: After-tax 401K to Roth IRA, limited allocation for all 401K "types".

Post by nolesrule » Tue Nov 12, 2019 11:16 am

retiredjg wrote:
Tue Nov 12, 2019 9:36 am
nolesrule wrote:
Tue Nov 12, 2019 8:53 am
Generally, once the money has been converted to Roth 401k, it is subject to the same withdrawal rules as money that was directly contributed to the Roth 401k, and no longer subject to non-Roth after-tax withdrawal rules. That usually means the money is "stuck" in the plan until separation of service or you've reached the age you can withdraw the funds.
I believe Alan S and Spirit Rider have told us it is distributable prior to separation.
If that's the case I stand corrected.

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