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I am no longer at my former employer but I have an existing 401k plan with Vanguard through them.

  • 30% of the contributions were pre-tax. (traditional 401k)

  • 70% of the contributions were post-tax. (roth 401k)

I see that I can transfer money to a Fidelity Rollover IRA and Roth IRA.

The caveat is that I have already done the backdoor Roth IRA conversion of $6,985 earlier this year.

If I route the Vanguard pre-tax 401k to Fidelity Rollover IRA and Vanguard Roth 401k to Fidelity Roth IRA, would there be any complications?

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If I route the Vanguard pre-tax 401k to Fidelity Rollover IRA and Vanguard Roth 401k to Fidelity Roth IRA, would there be any complications?

Yes, you'll need to prorate your backdoor IRA conversion and determine how much of the converted amount should be taxable. On the form 8606, see line 6 and the calculations on lines 9-12.

Ideally you don't want any balances in your traditional IRA by the end of the year if you don't want to deal with the pro-rata rules of the IRA conversions.

You can only rollover the Roth part of your 401k, and leave the traditional part in the 401k.

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  • Thanks for the response!! 1. Why would it be taxable? (All the money in Roth accounts is after-tax, right?) 2. My traditional IRA won't be touched. I will route the pre-tax/traditional IRA money to Rollover IRA. Would it still lead to complications? 3. The rolling over only Roth part of my 401k is a very interesting option! I might end up doing just that...
    – Raj
    Commented Feb 25 at 20:46
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    There's no such thing "rollover IRA". Rollover doesn't change the tax characteristic of the money. It's still pre-tax (traditional).
    – littleadv
    Commented Feb 25 at 21:20
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    @Raj it's because of the aggregation/pro-rata rule. Line 6 of Form 8606 instructs you to show the total value of your pre-tax IRAs (including rollover IRAs, which are just Traditional IRAs as littleadv mentioned) as of the last day of the year in question. Doesn't matter if you rolled the pre-tax 401k money into a different IRA than the one you did the Roth conversion out of, because everything is aggregated.
    – Stan H
    Commented Feb 25 at 22:37
  • What if I just rollover the Roth 401K to Roth IRA? Would it still be a problem?
    – Raj
    Commented Feb 26 at 22:45
  • @Raj not for the conversion, only traditional IRA balances matter for the pro rata rule.
    – littleadv
    Commented Feb 26 at 22:48

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