Author Topic: Move AT 401K to IRA questions  (Read 2602 times)

not_a_trex

  • Stubble
  • **
  • Posts: 108
Move AT 401K to IRA questions
« on: September 17, 2014, 11:14:49 AM »
I have a set of AT 401K contributions with Fidelity that I've made this year and I'm looking to roll them over to a Roth IRA that I have with Vanguard. The problem is this conversion will also include putting AT gains in the account into a T.IRA. I've already done a backdoor roth this year and my concern is making these additional roll over contributions will somehow pollute these IRA accounts when tax season comes around.

Does anyone have any experience with AT rollovers? Is there really any basis for being concerned about polluting the IRA accounts I already have? Would I be better off moving these contributions to Fidelity and forget about merging the two pools of money?

vivophoenix

  • Bristles
  • ***
  • Posts: 429
Re: Move AT 401K to IRA questions
« Reply #1 on: September 17, 2014, 11:38:17 AM »
are you talking about a roth 401k? from my understanding of back door rollovers, as long as you dont have any pre-taxed contributions, you should be fine.

also how are you putting after tax gains into a t IRA i thought you could only roll over 401k roth into an R IRA?

not_a_trex

  • Stubble
  • **
  • Posts: 108
Re: Move AT 401K to IRA questions
« Reply #2 on: September 17, 2014, 12:51:58 PM »
I'm talking about After-Tax contributions, which are different and separate from Roth contributions. Some 401K plans allow After-Tax contributions, which have a separate limit from the Pre-Tax/Roth contributions.

Supposedly I'm able to call up Fidelity and they are able to walk me through the process. Contributions will go into a Roth IRA and gains will be put in a Traditional IRA. What I'm not sure about are the tax consequences of doing this with an IRA I've already made contributions to. I don't think Fidelity customer support isn't obligated to help answer tax related questions like this (and probably not allowed) so I was wondering if there was anyone here with experience in doing this.

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 7254
  • Age: 39
  • Location: Seattle, WA
    • My blog
Re: Move AT 401K to IRA questions
« Reply #3 on: September 17, 2014, 01:09:48 PM »
Why is a traditional IRA needed at all? I have been able to do this type of rollover entirely into a Roth IRA. I often realize some taxable income when doing this if the after-tax shares have increased in value since the original contribution, but for any contributions you made this year the amount should be minimal. I would be concerned about pro-rata rules foiling your plan to split up the contributions and the gains because these are typically all in one after-tax bucket of your 401(k).

not_a_trex

  • Stubble
  • **
  • Posts: 108
Re: Move AT 401K to IRA questions
« Reply #4 on: September 17, 2014, 06:21:22 PM »
Okay, I'm willing to pay the taxes on the gains if it means it can go into the Roth. Is it all right if these rollover funds are put into a Roth with my annual contributions in it or do I need to worry about polluting that account? I guess I'm asking do I need to separate the rollover funds for any reason?

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 7254
  • Age: 39
  • Location: Seattle, WA
    • My blog
Re: Move AT 401K to IRA questions
« Reply #5 on: September 17, 2014, 11:46:13 PM »
The rollover doesn't affect your annual maximum contribution at all. You should keep records of the rollover: when you made it, how much of the rollover was taxable, and how much was after-tax funds. You should also keep track of how much you contribute to the Roth IRA each year. These bits of information will come in handy should you decide to withdraw from the account prior to age 59½. There is no benefit or reason to keep the rolled over Roth IRA funds in a different account from Roth IRA contributions. The tax code considers all of your Roth IRAs to be a single account for the purpose of calculating any early withdrawal penalties or other taxes related to your accounts.

not_a_trex

  • Stubble
  • **
  • Posts: 108
Re: Move AT 401K to IRA questions
« Reply #6 on: September 18, 2014, 07:22:29 PM »
Okay. I think that answers my question. Thanks, seattlecyclone.