I see this kind of mix up fairly often with 403b plans when people are trying to hedge their tax bets. You can roll the post tax contributions into your Roth IRA tax free, but you typically need to leave the company or be eligible for an in service withdrawal to trigger the move. The trick is making sure you specify that only the after tax basis moves to the Roth, while any earnings on those dollars should go to your traditional rollover IRA to avoid an immediate tax bill.
Most people don’t realize that under Notice 2014-54, you have the right to split these distributions into two different destinations. If you do a blanket rollover without clear instructions, you might end up with a pro-rata tax mess you didn’t expect. It is worth having the plan administrator cut separate checks to ensure your Roth IRA receives only the clean, post-tax funds while the growth stays deferred in your other accounts.
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I see this kind of mix up fairly often with 403b plans when people are trying to hedge their tax bets. You can roll the post tax contributions into your Roth IRA tax free, but you typically need to leave the company or be eligible for an in service withdrawal to trigger the move. The trick is making sure you specify that only the after tax basis moves to the Roth, while any earnings on those dollars should go to your traditional rollover IRA to avoid an immediate tax bill.
Most people don’t realize that under Notice 2014-54, you have the right to split these distributions into two different destinations. If you do a blanket rollover without clear instructions, you might end up with a pro-rata tax mess you didn’t expect. It is worth having the plan administrator cut separate checks to ensure your Roth IRA receives only the clean, post-tax funds while the growth stays deferred in your other accounts.