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Islandee writes:

Do I interpret this correctly: In this process, you're saying that I was able to roll over both taxed and non-taxed funds from the 401(k) to a traditional IRA? I thought that I had to exclude the already taxed funds from the rollover.

While NEXT year you will be able to transfer after-tax monies in a 401k to a traditional IRA, THIS year you may not do so. When you leave your job and transfer your 401k money you will get a check for the after-tax contributions because they cannot be transferred to a traditional IRA (or to a new employer's plan). Therefore, this year only pre-tax money may be transferred to the traditional IRA. If you later decide to transfer that money to a Roth IRA (the only way 401k money can get there), then the money will be taxed in the year the Roth conversion occurs.

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