Author Topic: After-Tax contributions to 401k after rolling into TIRA  (Read 394 times)

hooplady

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After-Tax contributions to 401k after rolling into TIRA
« on: March 02, 2021, 12:56:56 PM »
Hi all,
I retired 5 years ago but only this year started rolling funds out of my Traditional IRA into a Roth. Suddenly I'm slamming right into the tax consequences and don't feel at all prepared. I tried to search the forum to see if this question had already been answered but came up empty, sorry.

Over the years of my employment I've contributed to a couple of 401(k)'s, a 403(b), a SIMPL, Roth, and traditional IRA's. I've always gotten the full employer match, sometimes made after-tax contributions, and in the last decade of my career I was maxing the before-tax limit each year.

For simplicity's sake (or so I thought), as I left employers I rolled my plans over into a single TIRA. However, now I'm worried that I screwed up by not keeping my own spreadsheets of the various buckets of contributions. In my current statements I can't find where my accounts are categorized in this way. I do have some or the old records, but I think at some point I figured "Heck, I'll never need statements from my employer of 30 years ago." Sooo...I think I may have lost the benefit of those after-tax monies.

Thanks for whatever advice - or commiseration - anyone can offer!

hooplady

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Re: After-Tax contributions to 401k after rolling into TIRA
« Reply #1 on: March 02, 2021, 01:03:41 PM »
Ohhh crap I think I found my answer...I should have filed form 8606 when the rollovers were made, the custodian of my IRA isn't responsible for tracking it. Well my loss!

https://www.investopedia.com/articles/retirement/05/aftertaxassets.asp

seattlecyclone

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Re: After-Tax contributions to 401k after rolling into TIRA
« Reply #2 on: March 02, 2021, 01:19:54 PM »
I don't think an 8606 is required when you roll over your after-tax balance from a 401(k) to a traditional IRA. It will be required when you do Roth conversions.

Look at your 1099-R form that your 401(k) provider should have sent you for the year you rolled your money over to your IRA. Box 5 should contain your after-tax basis. This basis will carry forward to your IRA. You'll need this for the 8606 when you do a Roth conversion so that the conversion can be properly prorated between pre-tax and after-tax amounts.

hooplady

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Re: After-Tax contributions to 401k after rolling into TIRA
« Reply #3 on: March 02, 2021, 01:43:34 PM »
I don't think an 8606 is required when you roll over your after-tax balance from a 401(k) to a traditional IRA. It will be required when you do Roth conversions.

Look at your 1099-R form that your 401(k) provider should have sent you for the year you rolled your money over to your IRA. Box 5 should contain your after-tax basis. This basis will carry forward to your IRA. You'll need this for the 8606 when you do a Roth conversion so that the conversion can be properly prorated between pre-tax and after-tax amounts.
Thanks @seattlecyclone. I've been digging through files, luckily I don't follow the three-year rule when it comes to tax returns, lol. For the largest one I not only found the 1099-R but found the check stubs and notes. Looks like 401k before tax went to TIRA and Roth went into Roth as "Rollover Contributions", and after-tax went into my regular investment account as a "Tax-Free Return of Own Contributions".

No clue how ones from 20-30 years ago were handled but they were pretty small.

seattlecyclone

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Re: After-Tax contributions to 401k after rolling into TIRA
« Reply #4 on: March 02, 2021, 01:45:04 PM »
Glad you got that figured out! Would have probably been better to roll the after-tax amounts into Roth instead of taxable, but nothing you can do about it now.

hooplady

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Re: After-Tax contributions to 401k after rolling into TIRA
« Reply #5 on: March 02, 2021, 02:38:38 PM »
Glad you got that figured out! Would have probably been better to roll the after-tax amounts into Roth instead of taxable, but nothing you can do about it now.
Probably, not sure why we didn't. At that time I wasn't completely sure how my expenses would shake out over the next few years so I might have done it to have maximum flexibility in case I needed a cash infusion. Yes, I had spreadsheets and models for everything but walking away from a salary was still a bit terrifying.

jim555

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Re: After-Tax contributions to 401k after rolling into TIRA
« Reply #6 on: March 02, 2021, 06:53:33 PM »
The fiduciary should know the after tax contributions and be able to roll them into your Roth IRA.  The earnings and match would roll into a Traditional IRA.  That is what was done with my rollover when I transferred everything to IRAs and closed the 401K.

Greystache

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Re: After-Tax contributions to 401k after rolling into TIRA
« Reply #7 on: March 04, 2021, 08:01:54 AM »
I was lucky. When I rolled my 401K into a tIRA, the representative that was assisting in the transaction mentioned to me that I had some after tax money in the 401K and suggested rolling it into my Roth. I am grateful that she spoke up. I would have missed that opportunity without her help.