What tax forms have to filed when doing a rollover from After-tax 401(k) to Roth IRA? Examples appreciated.
If you roll over the after-tax 401(k) balance, contributions and earnings, entirely to a Roth IRA, then you'll pay income tax on the earnings on line 5b (Taxable Amount of Pensions and Annuities) of your 1040.
Here's the entire explanation, more context than you asked for:
- Pretax: traditional contributions and earnings, earnings on after-tax contributions
- Posttax: Roth contributions and earnings, after-tax contributions
If you ask your 401(k) plan provider to roll any part of the pretax amount into your Roth IRA instead of to your traditional IRA, then you will incur tax on that amount.
Your 1099-R will show the rolled-over pretax amount in box 2a, the corresponding posttax amount in box 5, and Code G in box 7. You'll include the box 2a amount as income on line 5b (Taxable Amount of Pensions and Annuities) of your 1040.
If, instead, you ask your 401(k) plan provider to roll your after-tax contributions to your traditional IRA and the earnings on them to your Roth IRA, you will incur no tax. This is permitted by IRS Notice 2014-54 (see here).
You must prorate your rollover distribution of after-tax balance between the pretax and posttax amounts. In other words, you may not rollover only the contributions, the posttax amount, to your Roth IRA, and leave the earnings, the pretax amount, in the 401(k). Instead, you must roll over pretax and posttax amounts at the same time. Therefore, you should have a traditional IRA ready to receive those pretax amounts that you'll be required to roll over.