Personal Investments • Mega Backdoor - Post separation from employer?

Based on other threads, the after-tax contributions should roll into a Roth. The gains on those contributions would go into a traditional IRA.

I'm not sure that's correct. I have done multiple Mega backdoor Roths and separared 3 times. I may be misremembering, but I think the earnings from the after-tax subaccount have to roll over to the Roth IRA as well. You will owe taxes on those earnings as a result. Just like you would when doing an in-plan conversion of after-tax contributions to Roth. The 1099-R form would reflect these earnings in the taxable amount box.

Some employers have implemented automatic in-plan conversion of 401k after-tax contributions to Roth so that there are never any earnings to be taxed.

Statistics: Posted by madbrain — Sat Mar 02, 2024 3:44 am — Replies 12 — Views 790

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