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Subject:  Re: 401K to rollover IRA Date:  5/14/2013  7:28 PM
Author:  billjam Number:  72241 of 75528

Since the funds are considered as part of the 401k(they really are), you can't just take them out and put them in a taxable account.

I referred to after-tax contributions only being withdrawn at the time of the rollover. Every company has a limit on the percentage of salary that can be contributed to a 401k on a tax deferred basis. Employees may contribute more than that but it must be after-tax money.

When I rolled my 401k I didn't even have choice. I was required to take a check for my after-tax contributions. Not the earnings on them, just the contributions. I deposited that check in my taxable brokerage account.

I believe now you may have the option of leaving those after-tax contributions in the rollover IRA. I'm strongly recommending OP not do that because of the IRS formula for withdrawing after-tax contributions from an IRA. I know about this because after Reagan's 1986 tax changes I continued to contribute to an IRA even though I could not claim the tax benefit of those contributions. I benefited from the earnings being tax deferred but after 13 years of withdrawals I have only been able to recover 40% of those after-tax contributions.
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