After-tax Contributions

[Nassau]

A participant in the plan rolled after-tax money into the plan back in 2005. At the time, the plan did not have an aftertax source but the plan recently added Roth 401(k). The participant is now requesting that we code the money as after-tax and distribute that along with the associated earnings out of the plan.

Question 1: Can after-tax money be re-classified as Roth 401(k) contributions?

Question 2: The participant wants the after tax-portion moved to a traditional IRA and the earnings moved to a qualified 401(k) plan. Is this possible?

[masteff]

http://www.irs.gov/pub/irs-drop/notice_2009-75.pdf

1) Not within the qualified plan it can't be; after-tax money is not roth contribution money, list it correctly as what it is.

2) Yes, see the notice in the link above, a participant can now roll directly from a qualified plan to a Roth IRA.