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Financial Planning / Foolish 401(k)s


Subject:  Re: 401K rollover Date:  11/21/2011  3:03 PM
Author:  mjolah Number:  24790 of 26270

I believe his question was about the distinction between pretax, Roth and employer matching contributions - and the answer is not dependent on being vested. Most recordkeepers maintain all of the sources in one "account" for investment purposes (although some have started allowing you to invest Roth and pretax funds differently - but that is still a minority of recordkeepers). The recordkeeper knows how much was contributed to each source (Roth, pretax and match) and can, on the fly, calculate the proportion of the one "account" attributable to each. On distributions, the calculation is done, and various amounts (depending on the source) will be treated for tax purposes differently. The distribution will be broken down into appropriate sources so that you can roll over Roth money into a Roth IRA and the pretax (including the match) into a traditional IRA.
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