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Financial Planning / Tax Strategies
|Subject: 401k roller, basis, and ROTH||Date: 1/4/2014 10:19 AM|
|Author: Goofyhoofy||Number: 119791 of 121774|
I've done a search and come up with pretty much what I expected. This has a twist, but one I don't think is right but thought I'd check here.
I'm rolling over one of Mrs. Goofy's 401k's from a long-ago employer into an already existing IRA at our brokerage. She has roughly $10,000 worth of "basis" (what the form describes as "non-taxable employee contributions).
A person on the retirement info line at the brokerage said I could separate that "basis" from the other and put it into a ROTH if the contributions were made before 1987. (They were.) The intent, obviously, is to separate the non-taxable at withdrawal from the taxable, not merely to roll over some of the taxable into a ROTH, which I could do anyway at any time. The remainder (not the $10,000 would go into her existing IRA.)
I have not heard of this before (particularly the pre-1987 thing), and am wondering if anyone here has, or is the person on the phone confused (or worse.)
Sidenote: even though we specifically asked that the 401k be transferred directly to the brokerage, the check was sent to us (made out to the broker FBO Mrs. Goofy), but it's been only a week, so no worries there. But why didn't they just do as we asked? The people on the retirement line say it happens all the time. Weird.
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