In-service rollover request with after tax funds

[cpc0506]

A particpant has contacted its employer to take an in-service withdrawal from his account.

Plan allows for in-service after age 59.5.

The participant has after-tax funds (old money, prior to Roth) as well as pre-tax and match. The amouunt of money he wants will require that some of his after-tax money be taken.

Question 1: Can you roll over after tax money to an IRA? I thought yes so long as the funds go to a ROTH account.....

Question 2: Should the money be taken from all account pro-rated so only a portion of the after-tax is withdrawn?

Thanks for your help.

[masteff]

1) Yes. See IRS Publication 575 page 26. (And after-tax money can be directly rolled over to another qualified plan or to a traditional or Roth IRA.)

2) The plan docs will hopefully tell you. It might have a source heirarchy or it might say pro-rata. The heirarchy can be different depending on the type of withdrawal (eg a loan, a partial lump sum, a periodic, etc).