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401(k) funds are usually not after-tax. The current income reported to the IRS by your employer is reduced by your 401(k) contributions. You may over-contribute; but I believe there is a penalty tax assessed for excess contributions, so I doubt you actually have after-tax 401(k) funds.

Either way, you will only be taxed once.

I don't know the details of the new tax rules; but since your bracket is going to be lowered from 15% to 10%, I'd do the conversion the year the 10% rate is fully phased in. That one strategy will save you a third of the taxes due.

In fact, I might consider such a strategy myself. From what I've heard, the tax-rate changes, as they're currently enacted, have a sunset clause. This means the rate reductions will also be phased out after a period without an act of Congress. If that story is true, people should rush to convert their regular IRAs to Roth IRAs whenever the rate changes are fully phased in.

- Joel
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