Default User wrote:
> I certainly could withdraw it, but I don't want to. The goal is to get
> it into a different tax-advantaged account with better options than the
> company 401(k).
Brian, you should research a recent IRS Notice, 2008-30. At least one
commentator says that it implicitly allows you to rollover ONLY the
after-tax part directly into a Roth IRA, as a "qualified rollover
contribution" (jargon for the 401k-to-Roth direct transfer). And you
could rollover the pretax money into a traditional/rollover IRA. If you
could do that there wouldn't be any federal tax on the ****tion moved to
a Roth.
In the past if you two-stepped it, meaning 401k to IRA, then converting
all or part of your IRA(s) to a Roth, the tax treatment was different.
You'd need to add up all your IRA values, and figure out the percentage
that is after-tax money...let's say it's $30k in IRAs, $10k is after-tax
contributions. Only 1/3 of every dollar converted to a Roth would be
after-tax money, regardless of which account the money came from.
But using the 401k-to-Roth provision you could convert the full $10k,
and only the full $10k, without incurring federal income tax. I don't
know if all states follow this as well.
One other thing mentioned in the notice...plan administrators need to
honor requests to rollover directly to a Roth IRA.
-Tad
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