Convert only After-tax employee contributions via In-plan Roth rollover?

Assume you have a Solo 401(k) that allows after-tax employee contributions and in-plan Roth rollovers and you have pre-tax money and after-tax employee money. Can you do an in-plan Roth rollover/conversion and convert only the after-tax amounts and exclude the pre-tax amounts from the conversion?

Assuming you have tracked the sources, generally speaking yes you can convert the after tax source and not the pre-tax source assuming the plan doesn't further restrict this. Basis converted is not taxable, gains on the after tax tax funds converted are taxable and I'm not 100% sure but I think if you are not converting 100% of the after tax source (basis and gains) I believe your need to prorate which potion is basis converted to Roth (non-taxable) and which portion is gains converted to Roth (taxable).

And each conversion has it's own 5 year aging period.

Thank you for the quick reply. I have a follow-up question. I have normally seen just a single self-directed brokerage (SDBA) account opened for Solo 401(k) plans where all contributions types are deposited into that single account (Pre-tax, after-tax, Roth deferral, Profit sharing, etc.). Is maintaining account balances using balance forward accounting for the different sources adequate enough if you are planning on doing after-tax employee contributions and converting to Roth; or, is it recommended to open up a separate SDBA account for Roth money, pre-tax money and after-tax money and transfer between them? 

I think either is acceptable, though with one man plan, I believe it is more common to open a separate ROTH brokerage sub-account to easily track the G/L between sources and transfer from the non-roth to the roth on the conversions.

and if the brokerage house will be responsible for 1099-Rs I would absolutely want to set up a 2nd account for the ROTH piece rather than try to argue with them when the eventual distributions are done.

On 5/25/2022 at 1:41 PM, Lou S. said:

if the brokerage house will be responsible for 1099-Rs

 

😂😂

18 hours ago, Bill Presson said:

😂😂

😂😂. Why the 😂😂 ? Most of them do issue the 1099-Rs.

On 5/27/2022 at 3:21 PM, Appleby said:

😂😂. Why the 😂😂 ? Most of them do issue the 1099-Rs.

For IRAs, absolutely. For retirement plans? Who?