401k vs Roth 401k

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01-13-2017, 07:45 AM

#31

Fdxlag2

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Quote:

Originally Posted by Nightflyer

So, I have been putting in 5% after tax for years.

Supposedly, Vanguard knows how much money this is, as it has been mixed with my 401k pre-tax.

Is there any way to convert the after tax money to a Roth IRA?

I don't think you can without paying tax on any gain. That said can't you just pull it out and back door it? So to speak.

01-13-2017, 07:49 AM

#32

ufgatorpilot

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I'd recommend checking out the Bogleheads forum (people who follow the investment philosophy of Jack Bogle, the founder of Vanguard).
https://www.bogleheads.org/forum/index.php

I was introduced to it last year, and it really changed my investing life. There are a lot of very knowledgeable users over there. There are some great threads on this very topic.

01-14-2017, 06:59 AM

#33

Red Letter

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Quote:

Originally Posted by Nightflyer

Call Vanguard to do this (a.k.a. Backdoor ROTH). They know your After-Tax Contributions and your GAINS. Rollover your After-Tax Contributions into a ROTH IRA (not ROTH 401k) and have your After-Tax GAINS sent to your Traditional IRA (if you don't have one or both of those accounts (ROTH IRA or Traditional IRA), Vanguard will be glad to set them up for you).

By having your GAINS sent to your Traditional IRA, there are no tax consequences (now). You can do this twice/year.

01-14-2017, 07:15 AM

#34

whalesurfer

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Quote:

Originally Posted by Red Letter

Brown flyer here and maybe things are a little different with vanguard versus fidelity or maybe I'm misunderstanding this issue but don't you have to move it to a regular IRA first and then convert it to a Roth IRA? (backdoor Roth)

..or are you saying that I can convert my regular 401K to my Roth IRA?
Here at ups we've had the Roth 401K option for quite some time and pretty much all of my 401K is roth (post tax). I also contribute to a separate Roth IRA (regular IRA first and then use the backdoor roth conversion).
About 2% of my 401K is in traditional 401K, money I saved before we had the Roth option. In the past I was told there was no way to convert it to Roth. Are you saying it's now possible to convert that 2% into a Roth option??

01-14-2017, 09:13 AM

#35

Fdxlag2

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He is talking about non 401k money vanguard manages for us. You can withdraw it without penalty pre-59.5 without penalty since it is after tax. Therefore you can convert it to a Roth IRA. The 401k we have can be converted to a Roth 401k. This is a new option for us and has some limitations. I do not think there is anyway to convert traditional 401k to a Roth IRA, unless you are 59.5 or older.