Personal Investments • How to treat "pre-tax" and "Roth money" (MBDR) in the same 401(k) plan?

Thank you all for the answers!

I agree it's nearly impossible to manage and rebalance if the funds are commingled. Are you sure you can't direct the converted Roth funds to a different investment? My plan allows this. If not, then change your investment elections for the rest of this year, since you're not contributing to PT anymore. Then change it back next year.

This is one of the drawbacks of a Roth 401k. For mine, it seemed to use the new funds purchase percentage settings whenever pretax or roth contributions occurred. If you can buy pretax one paycheck and Roth another, you could flip flop the settings and direct Roth to equities and pretax to bonds. This is kind of a pain. Maybe you could do 6 months of one and 6 months of the other. Make sure you don't lose company match if you change from all pretax to all roth or after tax.

For now, I'll try to separate funds by changing elections twice a year. This will work as I will max out pre-tax first each year. My company matches pre-tax contribution only.

Once I successfully direct pre-tax and roth money to different investments, will they gain/loss separately after that? Let's say I have 2 investments in the same BrokerageLink. Fund A (pre-tax) didn't grow and Stock B (Roth) doubled. Then my Roth amount should be doubled, not sharing the gain with pre-tax portion? Am I understanding correctly?

I wish they just created a sub account for Roth. In the long run, I'll think about rolling out to a separate Roth IRA. I don't know my plan allows it yet.

Statistics: Posted by inflames — Wed Jul 31, 2024 10:08 am — Replies 7 — Views 546

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