After-tax EE contributions rolled to Roth IRA?

[Santo Gold]

An HCE from a large corporation is retiring (he is age 65). He has around $1M in the corporations 401k plan. $900K is pre-tax money. The other $100K is after-tax (but not Roth) money. Can he roll the after-tax money into a Roth IRA?

Thanks

[ETA Consulting LLC]

He can roll the after-tax source (including the Employee after-tax amounts plus the earnings on those amounts) over to a Roth IRA. This is done by treating the after-tax source (that has been recordkept and tracked separately) as a separate "account or contract" under Section 72(d) for tax purposes. This, effectively, allows the distribution of the after-tax "SOURCE" without having to prorate the basis amount with the entire plan balance; keeping it restricted to after-tax contributions and the earnings on those amounts.

The plan "MUST" allow him a direct rollover to a Roth IRA, per IRC Section 408A(e) and IRS notice 2008-30.

Good Luck!

[mbozek]

An HCE from a large corporation is retiring (he is age 65). He has around $1M in the corporations 401k plan. $900K is pre-tax money. The other $100K is after-tax (but not Roth) money. Can he roll the after-tax money into a Roth IRA?

Thanks

HCE could rollover $1M to an TIRA immediatley, establish qualified plan for his consulting activities or business ventures and roll over pre tax funds to a qualified plan by 12/31/12 and in 2013 rollover the AT amount to a Roth IRA with minimum/no tax. Or he could rollover entire $1M to TIRA and park it until he rolls over the funds in a later year to a qualified plan established for his business ventures/consulting practice.