If your plan allows for it, you move the after tax contributions to Roth, expanding your Roth accounts much faster than annual contributions will allow.
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This is a real boon for early retirees, as well as anyone concerned about RMDs in traditional retirement. Basically, you are giving your Roth conversion ladder a running start.
Thanks for the reply. I'm not totally following though. Could you add some more clarity?
Specifically, if I put money into the after-tax portion of my 401(k) and then move it to my Roth IRA account, I have paid taxes when it went into my after-tax 401(k), and will only be able to withdraw the contribution amount without penalty.
If I want to withdraw the earnings, I will have to pay early-withdrawal penalties from the Roth IRA, correct? In this way, I will have paid tax on the contribution when I put it into my after-tax 401(k), and tax on the earnings when I withdrawal them from my Roth IRA. Is that right?