University of CA DCP Plan - Pre- and post-tax co-mingled

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Sandi_k
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University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

Hi all:

I'm hoping I can get some assistance.

It has recently become evident to me that we may have "oversaved" in pre-tax accounts; 94% of our retirement funds are in tax-deferred accounts. So I decided to start contributing post-tax to a 401(a) account, aka the "DCP account" at UC. My employer allows in-service rollovers to a Roth account, so that seems like an excellent plan, since I can withhold the additional taxes conveniently through my paycheck.

I am readying to call the Fidelity 800 number and request the in-service rollover to my already-established Roth, when it occurred to me that I'd never noticed the DCP account noting which funds are post-tax (current contributions since Jan 2021) and which are pre-tax (which began awhile ago, when the system began assessing an employee "contribution" to retirement.

So I have after-tax mixed in with pre-tax, and when I downloaded the "history" file from Fidelity, it was shockingly unhelpful. Then I downloaded a current "statement", and even it does not note that the current contributions are "post tax" or "after tax" contributions - which is very evident if you go to the "current contribution" page - it says in big font AFTER TAX CONTRIBUTION.

So - is there an easy way to see pre- vs. post-tax contributions and growth? Is there a secret UCRP/NetBenefits Fidelity screen that will break it out as I hope?

Any assistance is appreciated.
Ranunculus
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Ranunculus »

UC allows in-service rollovers to Roth accounts? I asked this question through UC Path and was told it was not allowed. I don’t know the answer to your question, but the good news is that you can get help from Fidelity directly without having to try to reach someone at UC. I just scheduled a phone appointment with my campus Fidelity rep through this website: https://digital.fidelity.com/prgw/digit ... pointments
withrye
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by withrye »

I do monthly after-tax rollover conversions from my UC DCP to a Roth IRA at Fidelity.

When logging into the main fidelity.com portal, it is not obvious which dollars are after-tax.

When logging into the netbenefits portal, the DCP account breaks out the pre-tax and after-tax portion in the Sources section.

Once you get to the right person in the Fidelity phone tree the rollover conversion is quite simple. You can ask for the growth in the after-tax portion (if applicable) be rolled over to your 403b, or you can elect to roll over the whole amount to the Roth and pay the tax on the (typically small) earnings that happened that day (assuming you call the first day every month).

I hope this helps.
gubernaculum
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by gubernaculum »

withrye wrote: Wed Jun 02, 2021 7:28 pm I do monthly after-tax rollover conversions from my UC DCP to a Roth IRA at Fidelity.

When logging into the main fidelity.com portal, it is not obvious which dollars are after-tax.

When logging into the netbenefits portal, the DCP account breaks out the pre-tax and after-tax portion in the Sources section.

Once you get to the right person in the Fidelity phone tree the rollover conversion is quite simple. You can ask for the growth in the after-tax portion (if applicable) be rolled over to your 403b, or you can elect to roll over the whole amount to the Roth and pay the tax on the (typically small) earnings that happened that day (assuming you call the first day every month).

I hope this helps.

This is correct. For UC contributions on Fidelity portal find view balance below the summary and it will take you to a page where you can click on transactions. Under transactions, you can specify time period and it will break it out what is after tax. You have to call them monthly to rollover to Roth. No other way.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Doctor Rhythm »

Set up a meeting with your local Fidelity rep and have them set up the rollover. Politely deflect their recommendation to consider actively managed funds. The DCP will have 3 sources of money: Pretax contributions, Post-tax contributions, and unrealized gains. UC keeps track of these buckets. The pre-tax money stays put. The post-tax money gets rolled into a Roth. The unrealized gains gets rolled into an IRA. Afterwards, you continue to make post-tax contributions to the DCP but immediately roll them over into the Roth. This requires a generally painless phone call. This is a well-known process to the phone rep if you call the correct division ((800) 248-4213). Once it’s in the Roth (usually by next morning), you can invest it as you want.

You can PM me if you have questions.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Thesaints »

What investment choices are there in the Fidelity Roth ? I'm debating whether rolling over to my Vanguard Roth, or open a roth with Fidelity.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by withrye »

Thesaints wrote: Wed Jun 02, 2021 10:25 pm What investment choices are there in the Fidelity Roth ? I'm debating whether rolling over to my Vanguard Roth, or open a roth with Fidelity.
It's a retail Roth IRA with Fidelity. All the usual options. I use FZROX because the price is right and I don't have to worry about being locked in due to it being an IRA where future sales in the account are not taxable events. I continue to use my Vanguard Roth IRA for annual contributions, and will likely consolidate to Vanguard if/when I stop contributing to the Fidelity IRA.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

withrye wrote: Wed Jun 02, 2021 7:28 pm I do monthly after-tax rollover conversions from my UC DCP to a Roth IRA at Fidelity.

When logging into the main fidelity.com portal, it is not obvious which dollars are after-tax.

When logging into the netbenefits portal, the DCP account breaks out the pre-tax and after-tax portion in the Sources section.

Once you get to the right person in the Fidelity phone tree the rollover conversion is quite simple. You can ask for the growth in the after-tax portion (if applicable) be rolled over to your 403b, or you can elect to roll over the whole amount to the Roth and pay the tax on the (typically small) earnings that happened that day (assuming you call the first day every month).

I hope this helps.
Fantastic, thank you! I suspect that the years of growth on the pre-2021 pre-tax contributions are more substantial, but I thank you for the breadcrumb menu direction. Very much appreciated.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

Ranunculus wrote: Wed Jun 02, 2021 7:15 pm UC allows in-service rollovers to Roth accounts? I asked this question through UC Path and was told it was not allowed. I don’t know the answer to your question, but the good news is that you can get help from Fidelity directly without having to try to reach someone at UC. I just scheduled a phone appointment with my campus Fidelity rep through this website: https://digital.fidelity.com/prgw/digit ... pointments
Yep, page 15:

https://ucnet.universityofcalifornia.ed ... iption.pdf

ROLLOVERS: FROM THE PLAN
Virtually all DC Plan pretax distributions are eligible for direct rollover (payable to a traditional IRA or another employer plan). As long as the check for the distribution is payable directly to the employer plan or IRA custodian, no taxes will be withheld and the money will retain its tax-deferred status. If made payable to the participant, distributions are subject to mandatory 20 percent federal tax withholding. Distributions made to non-spouse beneficiaries are eligible for direct rollovers to an inherited IRA.

DC Plan after-tax distributions are eligible for direct rollovers to certain employer plans and conversion rollovers to a Roth IRA.

***********

My understanding is that you let the payroll contribution get made into the FDRXX fund, and then call on the 3rd of the month, and direct an in-service rollover/conversion to a previously-established Roth account.

Fidelity Retirement Services can be reached directly by calling 866-682-7787.
Ranunculus
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Ranunculus »

Sandi_k wrote: Thu Jun 03, 2021 1:06 am
Ranunculus wrote: Wed Jun 02, 2021 7:15 pm UC allows in-service rollovers to Roth accounts? I asked this question through UC Path and was told it was not allowed. I don’t know the answer to your question, but the good news is that you can get help from Fidelity directly without having to try to reach someone at UC. I just scheduled a phone appointment with my campus Fidelity rep through this website: https://digital.fidelity.com/prgw/digit ... pointments
Yep, page 15:

https://ucnet.universityofcalifornia.ed ... iption.pdf

ROLLOVERS: FROM THE PLAN
Virtually all DC Plan pretax distributions are eligible for direct rollover (payable to a traditional IRA or another employer plan). As long as the check for the distribution is payable directly to the employer plan or IRA custodian, no taxes will be withheld and the money will retain its tax-deferred status. If made payable to the participant, distributions are subject to mandatory 20 percent federal tax withholding. Distributions made to non-spouse beneficiaries are eligible for direct rollovers to an inherited IRA.

DC Plan after-tax distributions are eligible for direct rollovers to certain employer plans and conversion rollovers to a Roth IRA.

***********

My understanding is that you let the payroll contribution get made into the FDRXX fund, and then call on the 3rd of the month, and direct an in-service rollover/conversion to a previously-established Roth account.

Fidelity Retirement Services can be reached directly by calling 866-682-7787.
Thank you so much for this information and for this thread. I’ve been so focused on future rollover of 403B balances that I neglected to research the DCP options.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

Ranunculus wrote: Thu Jun 03, 2021 8:19 am
Thank you so much for this information and for this thread. I’ve been so focused on future rollover of 403B balances that I neglected to research the DCP options.
You are welcome - this is a great community where we all learn from one another.

Now, to stuff my Roth for the last 5 years of employment!!
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

gubernaculum wrote: Wed Jun 02, 2021 9:38 pm This is correct. For UC contributions on Fidelity portal find view balance below the summary and it will take you to a page where you can click on transactions. Under transactions, you can specify time period and it will break it out what is after tax. You have to call them monthly to rollover to Roth. No other way.
Hmmm. No luck on the Fidelity site. Along the left-side ribbon, all accounts cascade vertically. When I click on the DCP Brokerlink, if takes me to a summary screen with clickable tabs from left to right:

Summary - Positions - Balances - Activity & Orders - Planning - Analysis - Statements - Account Features.

So I clicked on Balances, and I get:

- Total Account Value

- Cash Available to Trade

- Cash Available to Withdraw

withrye wrote: Wed Jun 02, 2021 7:28 pm I do monthly after-tax rollover conversions from my UC DCP to a Roth IRA at Fidelity.

When logging into the main fidelity.com portal, it is not obvious which dollars are after-tax.

When logging into the netbenefits portal, the DCP account breaks out the pre-tax and after-tax portion in the Sources section.

Once you get to the right person in the Fidelity phone tree the rollover conversion is quite simple. You can ask for the growth in the after-tax portion (if applicable) be rolled over to your 403b, or you can elect to roll over the whole amount to the Roth and pay the tax on the (typically small) earnings that happened that day (assuming you call the first day every month).

I hope this helps.
Hmmm. Still looking....

AHA!

- NetBenefits Home Page
- DCP account
- Balances
- SCROLL DOWN TO GRAPHICS and there is a "Sources" circle on the right.
- Click "Show Details"

Then the breakdown of pre-tax and after tax is shown.

Moving it now!

THANK YOU BOTH!
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

And another wrinkle: the number previously noted (800-248-4213) didn't work, as I had moved my UC accounts into Brokeragelink accounts previously.

So I was transferred to the BL desk, where a nice man named Alex verified my voiceprint, DOB, cell phone number, mailing address and email, as well as the account number of the Roth to which I was rolling over the funds.

He then disappeared for a few minutes, then came back and summarized:

- Markets currently closed, the transfer from BLink to Roth would be submitted tomorrow.
- It would be received by the Roth account on Monday.
- It normally takes 2-3 business days to "settle", but since I was smart and had it all ready to transfer, in cash, he thought it would be complete and settled by Tuesday.
- I would then be able to re-allocate the new funds in the Roth account to an investment by the middle of next week.

For future reference, if you have your UC accounts in Brokeragelink accounts, the direct line to call for the in-service rollover conversion is 866-956-3193.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by gubernaculum »

Sandi_k wrote: Thu Jun 03, 2021 7:07 pm And another wrinkle: the number previously noted (800-248-4213) didn't work, as I had moved my UC accounts into Brokeragelink accounts previously.

So I was transferred to the BL desk, where a nice man named Alex verified my voiceprint, DOB, cell phone number, mailing address and email, as well as the account number of the Roth to which I was rolling over the funds.

He then disappeared for a few minutes, then came back and summarized:

- Markets currently closed, the transfer from BLink to Roth would be submitted tomorrow.
- It would be received by the Roth account on Monday.
- It normally takes 2-3 business days to "settle", but since I was smart and had it all ready to transfer, in cash, he thought it would be complete and settled by Tuesday.
- I would then be able to re-allocate the new funds in the Roth account to an investment by the middle of next week.

For future reference, if you have your UC accounts in Brokeragelink accounts, the direct line to call for the in-service rollover conversion is 866-956-3193.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

gubernaculum wrote: Thu Jun 03, 2021 8:09 pm
Sandi_k wrote: Thu Jun 03, 2021 7:07 pm And another wrinkle: the number previously noted (800-248-4213) didn't work, as I had moved my UC accounts into Brokeragelink accounts previously.

So I was transferred to the BL desk, where a nice man named Alex verified my voiceprint, DOB, cell phone number, mailing address and email, as well as the account number of the Roth to which I was rolling over the funds.

He then disappeared for a few minutes, then came back and summarized:

- Markets currently closed, the transfer from BLink to Roth would be submitted tomorrow.
- It would be received by the Roth account on Monday.
- It normally takes 2-3 business days to "settle", but since I was smart and had it all ready to transfer, in cash, he thought it would be complete and settled by Tuesday.
- I would then be able to re-allocate the new funds in the Roth account to an investment by the middle of next week.

For future reference, if you have your UC accounts in Brokeragelink accounts, the direct line to call for the in-service rollover conversion is 866-956-3193.
You are a pro now
LOL! Not a pro, just enormously grateful for this community that encourages us to take charge of our investing, and our future. Thank you for your help!
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Ranunculus »

Sandi_k wrote: Thu Jun 03, 2021 7:07 pm And another wrinkle: the number previously noted (800-248-4213) didn't work, as I had moved my UC accounts into Brokeragelink accounts previously.

So I was transferred to the BL desk, where a nice man named Alex verified my voiceprint, DOB, cell phone number, mailing address and email, as well as the account number of the Roth to which I was rolling over the funds.

He then disappeared for a few minutes, then came back and summarized:

- Markets currently closed, the transfer from BLink to Roth would be submitted tomorrow.
- It would be received by the Roth account on Monday.
- It normally takes 2-3 business days to "settle", but since I was smart and had it all ready to transfer, in cash, he thought it would be complete and settled by Tuesday.
- I would then be able to re-allocate the new funds in the Roth account to an investment by the middle of next week.

For future reference, if you have your UC accounts in Brokeragelink accounts, the direct line to call for the in-service rollover conversion is 866-956-3193.
Are taxes withheld at the time of rollover or do you need to add the amount to quarterly estimated payments?

Thank again!
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Clever_Username »

I may have missed it, but in case this helps you: sometimes, I accidentally wait a few days before calling to make my monthly rollover from my post-tax DCP contribution to my Roth IRA at Fidelity. I have the option of rolling the gains (which I'd have to pay tax on if I convert) to my 403(b) instead of paying tax on them, and rolling the contribution to the Roth IRA. I do this, and I ask for it each time (it's once or twice not happened, costing me maybe $6 in taxes for a little bit more Roth space, which is fine).
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Ranunculus »

Clever_Username wrote: Thu Jun 03, 2021 11:14 pm I may have missed it, but in case this helps you: sometimes, I accidentally wait a few days before calling to make my monthly rollover from my post-tax DCP contribution to my Roth IRA at Fidelity. I have the option of rolling the gains (which I'd have to pay tax on if I convert) to my 403(b) instead of paying tax on them, and rolling the contribution to the Roth IRA. I do this, and I ask for it each time (it's once or twice not happened, costing me maybe $6 in taxes for a little bit more Roth space, which is fine).
So we are allowed to do in-service rollovers from the 403B to a Roth IRA, paying the required taxes? My list of questions for the Fidelity rep keeps growing, wish I had made the appointment sooner.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by withrye »

Ranunculus wrote: Fri Jun 04, 2021 8:51 am
Clever_Username wrote: Thu Jun 03, 2021 11:14 pm I may have missed it, but in case this helps you: sometimes, I accidentally wait a few days before calling to make my monthly rollover from my post-tax DCP contribution to my Roth IRA at Fidelity. I have the option of rolling the gains (which I'd have to pay tax on if I convert) to my 403(b) instead of paying tax on them, and rolling the contribution to the Roth IRA. I do this, and I ask for it each time (it's once or twice not happened, costing me maybe $6 in taxes for a little bit more Roth space, which is fine).
So we are allowed to do in-service rollovers from the 403B to a Roth IRA, paying the required taxes? My list of questions for the Fidelity rep keeps growing, wish I had made the appointment sooner.
I believe in-service rollovers are restricted to the 401a/DCP account.

To answer an earlier question of yours, I haven't had any taxes withheld when doing the rollover conversion, but I always perform the rollover on the first eligible day so I just accept the small amount of taxable conversion dollars. The majority of the rollover has no tax cost due to the source of funds bring an after-tax contribution. It may be possible to ask the Fidelity rep to withhold a set percentage of the taxable portion of the conversion.

The taxes on the after-tax contribution basis are automatically withheld by payroll (assuming your employer withholding is tuned that way through your W4).
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Ranunculus »

withrye wrote: Fri Jun 04, 2021 9:13 am
Ranunculus wrote: Fri Jun 04, 2021 8:51 am
Clever_Username wrote: Thu Jun 03, 2021 11:14 pm I may have missed it, but in case this helps you: sometimes, I accidentally wait a few days before calling to make my monthly rollover from my post-tax DCP contribution to my Roth IRA at Fidelity. I have the option of rolling the gains (which I'd have to pay tax on if I convert) to my 403(b) instead of paying tax on them, and rolling the contribution to the Roth IRA. I do this, and I ask for it each time (it's once or twice not happened, costing me maybe $6 in taxes for a little bit more Roth space, which is fine).
So we are allowed to do in-service rollovers from the 403B to a Roth IRA, paying the required taxes? My list of questions for the Fidelity rep keeps growing, wish I had made the appointment sooner.
I believe in-service rollovers are restricted to the 401a/DCP account.

To answer an earlier question of yours, I haven't had any taxes withheld when doing the rollover conversion, but I always perform the rollover on the first eligible day so I just accept the small amount of taxable conversion dollars. The majority of the rollover has no tax cost due to the source of funds bring an after-tax contribution. It may be possible to ask the Fidelity rep to withhold a set percentage of the taxable portion of the conversion.

The taxes on the after-tax contribution basis are automatically withheld by payroll (assuming your employer withholding is tuned that way through your W4).
Got it, thank you. I misinterpreted the previous post.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

Ranunculus wrote: Thu Jun 03, 2021 8:59 pm
Sandi_k wrote: Thu Jun 03, 2021 7:07 pm And another wrinkle: the number previously noted (800-248-4213) didn't work, as I had moved my UC accounts into Brokeragelink accounts previously.

So I was transferred to the BL desk, where a nice man named Alex verified my voiceprint, DOB, cell phone number, mailing address and email, as well as the account number of the Roth to which I was rolling over the funds.

He then disappeared for a few minutes, then came back and summarized:

- Markets currently closed, the transfer from BLink to Roth would be submitted tomorrow.
- It would be received by the Roth account on Monday.
- It normally takes 2-3 business days to "settle", but since I was smart and had it all ready to transfer, in cash, he thought it would be complete and settled by Tuesday.
- I would then be able to re-allocate the new funds in the Roth account to an investment by the middle of next week.

For future reference, if you have your UC accounts in Brokeragelink accounts, the direct line to call for the in-service rollover conversion is 866-956-3193.
Are taxes withheld at the time of rollover or do you need to add the amount to quarterly estimated payments?

Thank again!
Since it's a post-tax account, no taxes are due if you contributed to the DCP into the cash account - which is what I did.

If you had gains, you have several choices:

- Roll them over, pay the taxes via withholding from the transferred amount (which limits your investment $$, so no bueno);
- Roll the contributions to the Roth, and the gains to your 403(b) or 457 account;
- Already have planned the CG due, and just over-withhold via payroll adjustments monthly throughout the year.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by infotrader »

Sandi_k wrote: Fri Jun 04, 2021 12:57 pm
Ranunculus wrote: Thu Jun 03, 2021 8:59 pm
Sandi_k wrote: Thu Jun 03, 2021 7:07 pm And another wrinkle: the number previously noted (800-248-4213) didn't work, as I had moved my UC accounts into Brokeragelink accounts previously.

So I was transferred to the BL desk, where a nice man named Alex verified my voiceprint, DOB, cell phone number, mailing address and email, as well as the account number of the Roth to which I was rolling over the funds.

He then disappeared for a few minutes, then came back and summarized:

- Markets currently closed, the transfer from BLink to Roth would be submitted tomorrow.
- It would be received by the Roth account on Monday.
- It normally takes 2-3 business days to "settle", but since I was smart and had it all ready to transfer, in cash, he thought it would be complete and settled by Tuesday.
- I would then be able to re-allocate the new funds in the Roth account to an investment by the middle of next week.

For future reference, if you have your UC accounts in Brokeragelink accounts, the direct line to call for the in-service rollover conversion is 866-956-3193.
Are taxes withheld at the time of rollover or do you need to add the amount to quarterly estimated payments?

Thank again!
Since it's a post-tax account, no taxes are due if you contributed to the DCP into the cash account - which is what I did.

If you had gains, you have several choices:

- Roll them over, pay the taxes via withholding from the transferred amount (which limits your investment $$, so no bueno);
- Roll the contributions to the Roth, and the gains to your 403(b) or 457 account;
- Already have planned the CG due, and just over-withhold via payroll adjustments monthly throughout the year.
I call them as soon as the money as available (usually the day after payday), and always ask them to roll over everything. The interest is about several cents.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Clever_Username »

Sandi_k wrote: Fri Jun 04, 2021 12:57 pm Since it's a post-tax account, no taxes are due if you contributed to the DCP into the cash account - which is what I did.
Is there the ability to make post-tax contributions to DCP show up in a cash account while my normal (savings choice type things) contributions end up in a different investment choice?
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by withrye »

Clever_Username wrote: Sun Jun 06, 2021 12:22 pm
Sandi_k wrote: Fri Jun 04, 2021 12:57 pm Since it's a post-tax account, no taxes are due if you contributed to the DCP into the cash account - which is what I did.
Is there the ability to make post-tax contributions to DCP show up in a cash account while my normal (savings choice type things) contributions end up in a different investment choice?
Yes, you are able to differentially invest automated pre-tax and after-tax DCP contributions.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Thesaints »

Sandi_k wrote: Fri Jun 04, 2021 12:57 pm If you had gains, you have several choices:

- Roll them over, pay the taxes via withholding from the transferred amount (which limits your investment $$, so no bueno);
- Roll the contributions to the Roth, and the gains to your 403(b) or 457 account;
- Already have planned the CG due, and just over-withhold via payroll adjustments monthly throughout the year.
- Make a payment by the next estimated tax payments deadline.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

Thesaints wrote: Sun Jun 06, 2021 2:07 pm
Sandi_k wrote: Fri Jun 04, 2021 12:57 pm If you had gains, you have several choices:

- Roll them over, pay the taxes via withholding from the transferred amount (which limits your investment $$, so no bueno);
- Roll the contributions to the Roth, and the gains to your 403(b) or 457 account;
- Already have planned the CG due, and just over-withhold via payroll adjustments monthly throughout the year.
- Make a payment by the next estimated tax payments deadline.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Clever_Username »

withrye wrote: Sun Jun 06, 2021 12:36 pm
Clever_Username wrote: Sun Jun 06, 2021 12:22 pm
Sandi_k wrote: Fri Jun 04, 2021 12:57 pm Since it's a post-tax account, no taxes are due if you contributed to the DCP into the cash account - which is what I did.
Is there the ability to make post-tax contributions to DCP show up in a cash account while my normal (savings choice type things) contributions end up in a different investment choice?
Yes, you are able to differentially invest automated pre-tax and after-tax DCP contributions.
Thanks, I hadn't noticed that. Now I have to decide if I want to (mixed feelings on it) but at least I know I can.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.
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Sandi_k
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

Clever_Username wrote: Mon Jun 07, 2021 8:21 am
withrye wrote: Sun Jun 06, 2021 12:36 pm
Clever_Username wrote: Sun Jun 06, 2021 12:22 pm
Sandi_k wrote: Fri Jun 04, 2021 12:57 pm Since it's a post-tax account, no taxes are due if you contributed to the DCP into the cash account - which is what I did.
Is there the ability to make post-tax contributions to DCP show up in a cash account while my normal (savings choice type things) contributions end up in a different investment choice?
Yes, you are able to differentially invest automated pre-tax and after-tax DCP contributions.
Thanks, I hadn't noticed that. Now I have to decide if I want to (mixed feelings on it) but at least I know I can.
Roll over the after-tax portion to a Roth, and start the 5 year window. Then you can do your asset allocation however you like.
Gleevec
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Gleevec »

What is maximum amount per year one can use after tax DCP for mega backdoor Roth? I have seen different answers on BH (FYI have safe harbor, 403b, 457 maxed)
withrye
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by withrye »

Sandi_k wrote: Mon Jun 07, 2021 8:30 pm Roll over the after-tax portion to a Roth, and start the 5 year window. Then you can do your asset allocation however you like.
Do you mean the 5-year period that applies to qualified withdrawals after age 59.5? Any Roth IRA contribution (or backdoor) will start that clock, so any Roth IRA with funds in it before age 54.5 will satisfy that rule.

If you're referring to the 5-year period for conversions, this applies only to the taxable portion of the conversion. For folks converting the day after payday OR those rolling the earnings in the account to a trad IRA or their 403b, this 5-year period has minimal/no impact. The majority of the rollover conversion is nontaxable, and has no 5-year clock (i.e. it can be withdrawn tax- and penalty-free as soon as it hits the Roth IRA).

Edit to add: The rules on order of distributions from Roth accounts mean that the taxable portion of conversions are distributed before the nontaxable portion of those same conversions, on a per-year basis by oldest first (and all of the above after ordinary Roth contributions are exhausted, regardless of contribution year). So in practice if you are withdrawing conversion dollars from the Roth and it's been <5 years since the earliest conversion, you'll be penalized 10% of just the taxable portion of the conversion. This is a minor amount for most, for the reasons described above.
Gleevec wrote: Mon Jun 07, 2021 8:53 pm What is maximum amount per year one can use after tax DCP for mega backdoor Roth? I have seen different answers on BH (FYI have safe harbor, 403b, 457 maxed)
I believe the answer is sum of your pre-tax DCP contributions, any pre-tax employer match to your DCP contributions, and your after-tax DCP contributions cannot exceed $58,000 in 2021.

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Sandi_k
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

@withrye - yes, and yes. If they don't yet have a Roth, opening one starts the 5 year clock.

And if they do have a Roth, the 5 year clock starts with conversion of the tIRA to the Roth for access to those converted funds without penalty.

At least, that's my understanding.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by MoleMan1349 »

Hi all! Fellow longtime UC employee here. As someone that has utilized the megabackdoor Roth through our post tax DCP for some time, I put together this document to remind myself of the complexity of the use of the funds after conversion given all the different rules discussed. It is formulated from IRS publications and information from other fellow UC employees that use this process. Let me know if anyone disagrees or sees as any gaps - as always, fully open to input. Hope this help!



Ordering Rules for Distributions

If you receive a distribution from your Roth IRA that is not a qualified distribution, part of it may be taxable. There is a set order in which contributions (including conversion contributions and rollover contributions from qualified retirement plans) and earnings are considered to be distributed from your Roth IRA. For these purposes, disregard the withdrawal of excess contributions and the earnings on them (discussed under What if You Contribute Too Much? in chapter 2 of Pub. 590-A). Order the distributions as follows.

Regular contributions.
Conversion and rollover contributions, on a first-in, first-out basis (generally, total conversions and rollovers from the earliest year first). See Aggregation (grouping and adding) rules, later. Take these conversion and rollover contributions into account as follows:


Roth IRA Distribution Table

UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD NOT MET

Contributions: Tax-No; Penalty-No
Conversions: Tax-No; Penalty-Yes (Taxable Portion)
Conversions: Tax-No ;Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes; Penalty-Yes

UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD MET

Contributions: Tax-No; Penalty-No
Conversions: Tax-No; Penalty-No (Taxable Portion)
Conversions: Tax-No; Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes; Penalty-Yes

OVER AGE 59.5
LESS THAN FIVE YEARS SINCE OPENING FIRST ROTH IRA

Contributions: Tax-No ;Penalty-No
Conversions: Tax-No; Penalty-No (Taxable Portion)
Conversions: Tax-No; Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes; Penalty-No

OVER AGE 59.5
FIVE YEARS OR MORE SINCE OPENING FIRST ROTH IRA

All Distributions Are Qualified
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Clever_Username
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Clever_Username »

Sandi_k wrote: Mon Jun 07, 2021 8:30 pm
Clever_Username wrote: Mon Jun 07, 2021 8:21 am
withrye wrote: Sun Jun 06, 2021 12:36 pm
Clever_Username wrote: Sun Jun 06, 2021 12:22 pm
Sandi_k wrote: Fri Jun 04, 2021 12:57 pm Since it's a post-tax account, no taxes are due if you contributed to the DCP into the cash account - which is what I did.
Is there the ability to make post-tax contributions to DCP show up in a cash account while my normal (savings choice type things) contributions end up in a different investment choice?
Yes, you are able to differentially invest automated pre-tax and after-tax DCP contributions.
Thanks, I hadn't noticed that. Now I have to decide if I want to (mixed feelings on it) but at least I know I can.
Roll over the after-tax portion to a Roth, and start the 5 year window. Then you can do your asset allocation however you like.
I do. I didn't realize it has a five year window attached to it -- even the post-tax contribution?
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.
withrye
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by withrye »

Clever_Username wrote: Tue Jun 08, 2021 3:16 pm
Sandi_k wrote: Mon Jun 07, 2021 8:30 pm
Clever_Username wrote: Mon Jun 07, 2021 8:21 am
withrye wrote: Sun Jun 06, 2021 12:36 pm
Clever_Username wrote: Sun Jun 06, 2021 12:22 pm

Is there the ability to make post-tax contributions to DCP show up in a cash account while my normal (savings choice type things) contributions end up in a different investment choice?
Yes, you are able to differentially invest automated pre-tax and after-tax DCP contributions.
Thanks, I hadn't noticed that. Now I have to decide if I want to (mixed feelings on it) but at least I know I can.
Roll over the after-tax portion to a Roth, and start the 5 year window. Then you can do your asset allocation however you like.
I do. I didn't realize it has a five year window attached to it -- even the post-tax contribution?
The nontaxable (predominant) portion of the conversion has no five year window. The taxable (smaller) portion does, and comes out before the nontaxable portion if that's where you are in the distribution order (i.e. you've exhausted all direct Roth contributions and this is the earliest-year conversion you're withdrawing).

This PDF demonstrates it well: retirementlc.com/wp-content/uploads/2017/07/2017-07-06-Roth-IRA-Distribution-Ordering-Rules.pdf
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Clever_Username
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Clever_Username »

withrye wrote: Tue Jun 08, 2021 3:28 pm
The nontaxable (predominant) portion of the conversion has no five year window. The taxable (smaller) portion does, and comes out before the nontaxable portion if that's where you are in the distribution order (i.e. you've exhausted all direct Roth contributions and this is the earliest-year conversion you're withdrawing).

This PDF demonstrates it well: retirementlc.com/wp-content/uploads/2017/07/2017-07-06-Roth-IRA-Distribution-Ordering-Rules.pdf
Thank you. This seems like a lot to track for a buck here or there coming out of gains before the roll.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by neowiser »

Gleevec wrote: Mon Jun 07, 2021 8:53 pm What is maximum amount per year one can use after tax DCP for mega backdoor Roth? I have seen different answers on BH (FYI have safe harbor, 403b, 457 maxed)
On the phone with Fidelity again. The UC document clearly says that the $58,000 limit is a total of pre and post tax contributions. FIDO rep had told me we could contribute $58,000 independent of pretax amounts.
https://www.myucretirement.com/Resource/278
Save up to $58,000 in the DC Plan (2021 limit).1 All DC Plan contributions (pretax and after-tax) count towards the $58,000 limit. This includes contributions made by you and UC in the Pension Choice DC Supplement or Savings Choice accounts.
Last edited by neowiser on Thu Aug 05, 2021 4:58 pm, edited 1 time in total.
Doctor Rhythm
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Doctor Rhythm »

The after tax limit ($58,000) changes (increases) usually on an annual basis by $500-1000. I have some old pretax money in my DCP, but have not made (nor am I able to make) additional pretax contributions to it in (?) decades. I’m in the pre-2013 tier, BTW, and can contribute pretax to the 457 and 403b.

Here’s the doc for the DCP: https://ucnet.universityofcalifornia.ed ... iption.pdf

On page 13, it reads:
The maximum amount participants may contribute annually to the After-Tax Account is determined by the IRC §415(c) limit. Generally, this amount is the lesser of:
• 100 percent of the participant’s adjusted gross UC salary or
• $58,000 (in 2021)
This limit applies to all annual additions as defined in IRC §415(c) including employer contributions to the DC Plan and mandatory employee pretax contributions to the DC Plan. Note that contributions to Savings Choice or Pension Choice supplemental accounts may reduce the amount participants may contribute to the DC Plan After-Tax Account.
neowiser
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by neowiser »

Another Fidelity rep has stated that as long as pretax contributions from the employee and employer are going to the pension account DCP, not the savings account, the employee is allowed to contribute $58,000 to roll over to a Roth IRA.
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Sandi_k
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

OK, end of year in-service rollover from DCP post-tax 401(a) account to the Roth concluded.

MBR for 2021 is a wrap.

:D
Doctor Rhythm
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Doctor Rhythm »

Sandi_k wrote: Tue Dec 21, 2021 6:03 pm OK, end of year in-service rollover from DCP post-tax 401(a) account to the Roth concluded.

MBR for 2021 is a wrap.

:D
Wasn’t sure if you meant that you make a single year-end rollover to the Roth or that it’s the final rollover of the year. If you aren’t doing it monthly (or however often you make an after-tax contribution), you should consider doing so. Any gains on after-tax money in the 401a/DCP are taxable when withdrawn or rolled over.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by infotrader »

I have been calling them using 1800-557-1900 since early 2017. In the most recent UCRP webinar on the topic, the fidelity representative gave a number for rollover. I tried it out of curiosity, and it was a wrong number, and I got transferred 3 times!
I always do it on the day after payday, and ask to roll over everything including some pennies earned overnight.
I believe it is very complicated for UC to promote the idea, so they did not have webinars on the topic until a few months ago.
I also read annual UCRP report and only 5000 people use this feature and the number did not change much over the years. Also, the average contribution amount is very low, about 500 per month.
Personally, I use all three plans and have zero take home pay in the last 5 years..
Last edited by infotrader on Thu Dec 23, 2021 9:28 am, edited 4 times in total.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

Doctor Rhythm wrote: Tue Dec 21, 2021 8:59 pm
Sandi_k wrote: Tue Dec 21, 2021 6:03 pm OK, end of year in-service rollover from DCP post-tax 401(a) account to the Roth concluded.

MBR for 2021 is a wrap.

:D
Wasn’t sure if you meant that you make a single year-end rollover to the Roth or that it’s the final rollover of the year. If you aren’t doing it monthly (or however often you make an after-tax contribution), you should consider doing so. Any gains on after-tax money in the 401a/DCP are taxable when withdrawn or rolled over.
Yes, I am aware. This was the third rollover of the year.
infotrader
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by infotrader »

There was an email from UCRP last week to remind those who have contributed to the plan to roll it over.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Sandi_k »

infotrader wrote: Thu Dec 23, 2021 9:20 am There was an email from UCRP last week to remind those who have contributed to the plan to roll it over.
Yes, I got one as someone who had previously done a DCP mega backdoor Roth election.
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by saladman »

I was hoping to get some clarification on setting up a "mega backdoor Roth". I'm a per diem employee at UC and pickup about 1-3 8-hour shifts per pay period. I hadn't really been paying attention to my retirement benefits at UC and only recently realized I've got about $20,000 of pre-tax contributions in my UC DCP account all in a default target date fund.

I wanted to start making after-tax contributions so that I can convert them over to my Roth IRA account (which I've been funding via "back door" conversions for the past few years at the $6000-6500 limit).

My question is, once I start making AFTER-tax contributions to the UC DCP Account (planning to do about $600 per paycheck), will I be able to convert just this portion, and leave the existing $20,000 alone? My plan was to allocate the AFTER-tax contributions 100% toward the "UC Savings Fund" to avoid any taxable gains while the funds sit here until I do the conversion over to the Roth... does this strategy make sense?

Thanks in advance!
Doctor Rhythm
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Re: University of CA DCP Plan - Pre- and post-tax co-mingled

Post by Doctor Rhythm »

saladman wrote: Thu Jul 06, 2023 5:04 pm I was hoping to get some clarification on setting up a "mega backdoor Roth". I'm a per diem employee at UC and pickup about 1-3 8-hour shifts per pay period. I hadn't really been paying attention to my retirement benefits at UC and only recently realized I've got about $20,000 of pre-tax contributions in my UC DCP account all in a default target date fund.

I wanted to start making after-tax contributions so that I can convert them over to my Roth IRA account (which I've been funding via "back door" conversions for the past few years at the $6000-6500 limit).

My question is, once I start making AFTER-tax contributions to the UC DCP Account (planning to do about $600 per paycheck), will I be able to convert just this portion, and leave the existing $20,000 alone? My plan was to allocate the AFTER-tax contributions 100% toward the "UC Savings Fund" to avoid any taxable gains while the funds sit here until I do the conversion over to the Roth... does this strategy make sense?

Thanks in advance!


You should schedule a free meeting with the local Fidelity person to arrange this. Once you start contributing post-tax into the DCP, you will have 3 kinds of money there: 1. Pretax contributions 2. Unrealized gains from pretax contributions, and 3. Post tax contributions. In my case, #1 stayed in the DCP, #2 was rolled into a (new) tIRA, and #3 was rolled into a (new) Roth.

Every month I contribute after tax to the DCP and then call Fidelity to rollover the contribution the the Roth. If the contribution has gains before rollover, you can rollover the gain to the Roth as a taxable event, or roll it over to a tax deferred account.
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