After-tax rollover into a qualified plan. Problem?

[Santo Gold]

Company owner has a 401(k) plan and wants to rollover about $16,000 in after-tax money into the plan. Assuming that the plan allows for after-tax money and assuming the TPA accounts for this money separately (tracks pre and post money separately), is this a problem? Also, is there any special paperwork that needs to be completed to accomplish?

Thanks

[Belgarath]

Depends. If the distribution is from an IRA, then you can only roll the otherwise taxable portion. As to how this would work if there are deemd IRA accounts, I'm not sure, as I haven't looked into this. Our plan documents do not allow rolling in after tax money, so we avoid these problems.

[rcline46]

What is the source of the $16,000? Is it one of those listed as permissible rollover sources? It would be very rare to have any after-tax money in a permissible source.

[Guest R. Daestrom]

The source of the money is key. It has to be from either another qualified plan, 403(b) plan, 457 plan, or IRA (only pre-tax money). I thought there might have been an exception if after-tax money contributions are allowed, but I don't see that. I wonder if that will change when Roth 401ks come into existence.