Special Tax Notice

[austin3515]

We're leaning towards giving everyone BOTH the Roth AND the regular tax notice together. They'll be stapled in one packet together, but referred to as the two separate notices that are included. We're going to tweak the introductory paragraphs from the template which says "you're getting this because some or all of your account can be rolled over to a Roth IRA..." accordingly.

What are other people doing?

[401king]

We're doing the same thing, it sounds like. Using the template provided for both, for each section we list Traditional and Roth so it is evident that the information provided is for the respective type of account. For example, here's a piece of one of the sections:

"How can a rollover affect my taxes?

Traditional Accounts

You will be taxed on a payment from the Plan if you do not roll it over. If you are under age 59½ and do not do a rollover, you will also have to pay a 10% additional income tax on early distributions (unless an exception applies). However, if you do a rollover, you will not have to pay tax until you receive payments later and the 10% additional income tax will not apply if those payments are made after you are age 59½ (or if an exception applies).

Roth Accounts

After-tax contributions included in a payment from a designated Roth account are not taxed, but earnings might be taxed. The tax treatment of earnings included in the payment depends on whether the payment is a qualified distribution. If a payment is only part of your designated Roth account, the payment will include an allocable portion of the earnings in your designated Roth account. "