Converstion of 401k to IRA

[Guest giri]

I have almost 90% of my contribution to 401k as an After tax contribution and only 10% pre tax. If I roll over my 401k (due to job change) to an IRA and eventually to a Roth IRA do I have to pay tax again on the after tax component of my 401k when it is converted to a IRA and also during conversion from a Traditional IRA to a Roth IRA.

[ERISAnut]

No, you will not. That portion will not be taxed again.

[Guest giri]

No, you will not. That portion will not be taxed again.

I was told that when the rollover is made the plan administrator must code 1099-R for after tax contribution and if not it will be fully taxed again during conversion from 401k to Traditional IRA

[ERISAnut]

True, but that is the point. The payor must properly code the 1099-R, or they aren't doing their job correctly. It will be coded in a way to ensure the basis is contained within the IRA.

You will need to have your financial advisor or company you are establishing the IRA with to guide the transactions. It is not complicated, but your particular set of circumstances may vary. They will also explore a direct rollover to a Roth IRA.