Author Topic: Does a 401k to 401k Roth conversion trigger IRA pro-rata rule?  (Read 1239 times)

FirePita

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Does a 401k to 401k Roth conversion trigger IRA pro-rata rule?
« on: October 23, 2018, 10:56:53 AM »
I currently have a 401k plan with my current employer that allows me to do 401k conversions to Roth 401k. I also have a roll over IRA account from my previous employer. I know IRA conversions to Roth IRA trigger the pro-rata rule which results in a taxable event on the full IRA balance. Does anyone know if the 401k conversion to Roth 401k has the same effect? Someone mentioned that it does not since the IRA pro-rata rule is based on IRA pooling and does not include 401k balances. Just wanted to confirm this with others. TIA!

terran

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Re: Does a 401k to 401k Roth conversion trigger IRA pro-rata rule?
« Reply #1 on: October 23, 2018, 11:39:42 AM »
No, it wouldn't, but you will owe taxes on the full amount of the conversion if you convert from tax deferred to Roth 401(k). Or does your 401(k) also allow after tax contributions that you want to convert to Roth?

FirePita

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Re: Does a 401k to 401k Roth conversion trigger IRA pro-rata rule?
« Reply #2 on: October 23, 2018, 11:58:19 AM »
No, it wouldn't, but you will owe taxes on the full amount of the conversion if you convert from tax deferred to Roth 401(k). Or does your 401(k) also allow after tax contributions that you want to convert to Roth?

Great. Yes these are after-tax contributions that I’m converting so no tax except for gains between contribution and conversion.