"Dick Watson" <littlegreengecko[at]mind-enufalready-spring.com> wrote:

- quote -

(1) See Section 402(a) for the rules for how the after tax
(and the taxable amounts for that matter) are handled.

(`2) See Section 402(c)(2) for the rule allowing the rollover of after
tax amounts from employer retirement plans to IRAs. This was added in
2001.

Those are the official rules. Your understanding agrees
with them.

--
Drew Edmundson, CPA
Cary, NC

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- quote -

The year of the rollover. It's buried in the instructions
for line 2 of the 8606.

--
Phil Marti
Clarksburg, MD

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To recap:

That's:
One vote for call a pro.
One vote for I can't roll over the after-tax contributions to
the IRA (and see a blog entry on the 14th that never
materialized).
Two votes for a) yes I can roll over the after-tax
contributions to the IRA and yes I would report it on 8606
line 2 or b) yes I can walk with it without tax consequence.

I don't know whether that's a quorum, but I hear two votes
that my original conclusions I came here to confirm are
correct.

Thanks for the help!

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"Harlan Lunsford" <hnslunsford[at]bellsouth.net> wrote:

- quote -

If you change your after tax basis--e.g., you increased it
with rollover money--and want the IRS to recognize your new
after tax basis, report it. That's more or less what it says
at the top of the instructions as to why to use the form.

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Phil Marti wrote:
- quote -

Are you saying use the 8606 in the year OF the rollover?
Or just in years of distribution?

A client called me about this January 2nd and I told him not
to worry; he didn't have to get a form 8606 from IRS, that I
had plenty! (grin)

ChEAr$,
Harlan Lunsford, EA n LA

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"Taxxcpa" <taxxcpa[at]sbcglobal.net> wrote:

- quote -

Thanks for the info. I couldn't find the blog entry you
cite, however.

Any reference citations (Pub x, page y would be great) would
be gratefully appreciated.

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Dick Watson wrote:

- quote -

The instructions for the 8606 tell you to use Line 2 to
account for the basis of a rollover of already taxed
contributions. You are correct that you have a choice when
it comes to your cost basis in your pension. Assuming the
plan allows it, you can walk away with the money that was
already taxed and just rollover the untaxed amount or you
can rollover the whole shebang and use the 8606 to establish
your cost basis in the IRA.

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"Taxxcpa" <taxxcpa[at]sbcglobal.net> wrote:

- quote -

Yes you can, for several years now. You then report the
after-tax portion on line 2 of Form 8606 for the year of the
rollover.

To OP: Yes you can take the after-tax contributions without
tax consequence. The 1099-R will show the nontaxable
portion. Confirmation of this should be in IRS Publication
575, but I haven't been able to find it after a brief look.

--
Phil Marti
Clarksburg, MD

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Dick Watson wrote:

- quote -

You cannot roll over after-tax 401K money into a Rollover
IRA.

You can roll over the pre-tax money. In 2007 there you can
roll over money from one 'qualified' plan to another
'qualified' plan but not to a Rollover IRA. For more details
read my blog on this subject which will be published
tomorrow, Jan 14, at http://wwwtaxman.blogspot.com

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"Benjamin Yazersky CPA" <johndoe[at]nowhere.com> wrote:

- quote -

I've read the SPD until my head hurts. It has all kinds of may and might and
can talk and not much must and shall and will talk.

- quote -

No freebies here?

I mean it's two simple questions:

1) can I just walk with it? (My understanding from talking
to the plan provider is that in a rollover scenario their
normal procedure is to send two checks. One id the pre-tax
money and is made out to the IRA Company FBO Me and the
other is the after-tax contributions and is made out to me.)

2) If I roll it over, where do I report its addition to the
after tax basis of the IRA? Form 8606 line 2?

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"Dick Watson" <littlegreengecko[at]mind-enufalready-spring.com> wrote in

- quote -

many of these things have some dependency on the plan of the
employer you are departing from the first thing to do isto
read those plan documents & find out what you can & can't do
beyond that, some professional tax planning would be advised

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

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I'm about to get traded to a new employer and will then be
able to rollover my existing 401(k) from the current
employer. That plan has a significant amount of after-tax
contributions.

I've done a lot of research and conclude I have two choices:

1) I can keep take the after tax contributions amount and
put it in a taxable account and not have further tax issues
associated with it. I cannot find anywhere in anything
IRS-like that says this is possible, but find other
references in google to suggest it is so.

2) I can rollover the taxable amount to an IRA and track it
as part of my after tax contributions to the IRA. As near as
I can tell, I would report after tax contribution on line 2
of form 8606 and add it to prior after tax contributions to
the IRA to track the after tax contributions basis in the
401(k). (So I interpret the third adjustment exception in
the instructions for the 2005 form 8606 line 2. There is no
2006 form/instructions yet.) The form line 2 title would not
hint that a rollover after tax 401(k) contribution goes
there.

Are my conclusions correct? Is there a source that says that
I can just walk with the after-tax contributions? Is form
8606, line 2, the correct place to put the 401k after tax
contribution amount if I roll it over?

Thanks for your thought!

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >