after tax contributions on termination of employment

[Guest josephr]

Have an employee with voluntary after tax balance who has terminated employment and wants rollover. New brokerage account does not want after tax contributions.

If all but after-tax is rolled over, is the after tax still considered tax fee in year of distribution, since its a complete distribution?

Employee is only 52 if that has a bearing...

Thanks

[ERISAnut]

The individual can take the after-tax portion in cash and rollover the pre-tax portion to the IRA (assuming it is a brokerage account). The one interesting thing to note is that the brokerage company has no way of knowing the tax status of the funds being rolled into the IRA (and therefore has no responsibility for tracking the basis). The idea of the brokerage firm stating what amounts they prefer is not reasonable. It is the taxpayer that continues to track their after-tax basis using the Form 8606.

Not sure if some particular set of facts are not included. For what it is worth, hope this helps.