Employer 401K Enhancements

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Topic Author
tony_roach
Posts: 141
Joined: Sun Nov 19, 2017 1:05 pm

Employer 401K Enhancements

Post by tony_roach »

Bogleheads,

Employer just announced new 401K enhancements today which I'm excited about. I will be able to put away some additional funds (I guess a version of the Mega Backdoor Roth with an after-tax contribution cap). Here are the updates:

-Allowing after-tax contributions: for those maxing out pretax or roth 401K we can now contribute after-tax dollars up to 10K/yr.

-Roth in-plan conversions: any employees that choose to make after-tax contributions we can convert these dollars into the Roth 401K portion of our plan (can be setup to be done automatically to minimize earnings on the after tax dollars).

I have been maxing out my 401K (all Traditional dollars) so I'm considering doing this so I can store more dollars away.

Questions:
I'm wondering if there are any potential issues with now having both Traditional and Roth dollars in my 401K?
If I leave my employer I assume I could split and roll each contribution type into their own Traditional and Roth IRA?

Thanks!
Last edited by tony_roach on Mon Jun 21, 2021 6:45 pm, edited 1 time in total.
milktoast
Posts: 626
Joined: Wed Jul 10, 2019 8:17 pm

Re: Employer 401K Enhancements

Post by milktoast »

Sounds good. Your plan may have two different accounts for Traditional vs Roth. Or they may be one account with separately tracked balances. But either way, you should be able to rollover the traditional into traditional and roth into roth.
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retired@50
Posts: 12835
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Employer 401K Enhancements

Post by retired@50 »

tony_roach wrote: Mon Jun 21, 2021 6:35 pm Questions:
I'm wondering if there are any potential issues with now having both Traditional and Roth dollars in my 401K?
If I leave my employer I assume I could split and rollover both dollar amounts into their own Traditional and Roth IRA?

Thanks!
No issues. It's a good opportunity to save more, assuming your budget allows it.
Your assumption is correct, the dollars will retain their unique tax treatment when rolled out.

See links:
https://www.bogleheads.org/wiki/After-tax_401(k)

https://www.bogleheads.org/wiki/Priorit ... nvestments

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Topic Author
tony_roach
Posts: 141
Joined: Sun Nov 19, 2017 1:05 pm

Re: Employer 401K Enhancements

Post by tony_roach »

retired@50 wrote: Mon Jun 21, 2021 6:45 pm
tony_roach wrote: Mon Jun 21, 2021 6:35 pm Questions:
I'm wondering if there are any potential issues with now having both Traditional and Roth dollars in my 401K?
If I leave my employer I assume I could split and rollover both dollar amounts into their own Traditional and Roth IRA?

Thanks!
No issues. It's a good opportunity to save more, assuming your budget allows it.
Your assumption is correct, the dollars will retain their unique tax treatment when rolled out.

See links:
https://www.bogleheads.org/wiki/After-tax_401(k)

https://www.bogleheads.org/wiki/Priorit ... nvestments

Regards,
Excited to be able to contribute some more. We just paid off our home so we can re-purpose those dollars to use here instead of sending them to the mortgage company.
Vanguard User
Posts: 2191
Joined: Wed May 26, 2021 5:46 pm
Location: Sugar Land, Texas

Re: Employer 401K Enhancements

Post by Vanguard User »

tony_roach wrote: Mon Jun 21, 2021 6:35 pm Bogleheads,

Employer just announced new 401K enhancements today which I'm excited about. I will be able to put away some additional funds (I guess a version of the Mega Backdoor Roth with an after-tax contribution cap). Here are the updates:

-Allowing after-tax contributions: for those maxing out pretax or roth 401K we can now contribute after-tax dollars up to 10K/yr.

-Roth in-plan conversions: any employees that choose to make after-tax contributions we can convert these dollars into the Roth 401K portion of our plan (can be setup to be done automatically to minimize earnings on the after tax dollars).

I have been maxing out my 401K (all Traditional dollars) so I'm considering doing this so I can store more dollars away.

Questions:
I'm wondering if there are any potential issues with now having both Traditional and Roth dollars in my 401K?
If I leave my employer I assume I could split and roll each contribution type into their own Traditional and Roth IRA?

Thanks!
Was this an email Fidelity? I got this too today.
Topic Author
tony_roach
Posts: 141
Joined: Sun Nov 19, 2017 1:05 pm

Re: Employer 401K Enhancements

Post by tony_roach »

Vanguard User wrote: Mon Jun 21, 2021 7:32 pm
tony_roach wrote: Mon Jun 21, 2021 6:35 pm Bogleheads,

Employer just announced new 401K enhancements today which I'm excited about. I will be able to put away some additional funds (I guess a version of the Mega Backdoor Roth with an after-tax contribution cap). Here are the updates:

-Allowing after-tax contributions: for those maxing out pretax or roth 401K we can now contribute after-tax dollars up to 10K/yr.

-Roth in-plan conversions: any employees that choose to make after-tax contributions we can convert these dollars into the Roth 401K portion of our plan (can be setup to be done automatically to minimize earnings on the after tax dollars).

I have been maxing out my 401K (all Traditional dollars) so I'm considering doing this so I can store more dollars away.

Questions:
I'm wondering if there are any potential issues with now having both Traditional and Roth dollars in my 401K?
If I leave my employer I assume I could split and roll each contribution type into their own Traditional and Roth IRA?

Thanks!
Was this an email Fidelity? I got this too today.
Yes. Assume you work for the same big company whose HQ is in Philly.
Vanguard User
Posts: 2191
Joined: Wed May 26, 2021 5:46 pm
Location: Sugar Land, Texas

Re: Employer 401K Enhancements

Post by Vanguard User »

tony_roach wrote: Mon Jun 21, 2021 7:42 pm
Vanguard User wrote: Mon Jun 21, 2021 7:32 pm
tony_roach wrote: Mon Jun 21, 2021 6:35 pm Bogleheads,

Employer just announced new 401K enhancements today which I'm excited about. I will be able to put away some additional funds (I guess a version of the Mega Backdoor Roth with an after-tax contribution cap). Here are the updates:

-Allowing after-tax contributions: for those maxing out pretax or roth 401K we can now contribute after-tax dollars up to 10K/yr.

-Roth in-plan conversions: any employees that choose to make after-tax contributions we can convert these dollars into the Roth 401K portion of our plan (can be setup to be done automatically to minimize earnings on the after tax dollars).

I have been maxing out my 401K (all Traditional dollars) so I'm considering doing this so I can store more dollars away.

Questions:
I'm wondering if there are any potential issues with now having both Traditional and Roth dollars in my 401K?
If I leave my employer I assume I could split and roll each contribution type into their own Traditional and Roth IRA?

Thanks!
Was this an email Fidelity? I got this too today.
Yes. Assume you work for the same big company whose HQ is in Philly.
Yes. Maybe it is just that 1 company that is doing it? I am looking to gain more info too. Thanks for posting.
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