From reading this article, it seems extremely hard to "separate" the pre-tax and the Roth parts of 401(k)s -- you must always move them together. But moving them together is often not efficient; e.g. rolling them both over to a Traditional IRA will give you basis for the basis from the Roth, but basis in a Traditional IRA is not very efficient since its earnings are taxable; rolling them both over to a Roth IRA will cause conversion tax on the pre-tax part, which you may not want.

On the other hand, if you just had one or the other, it would be easy to deal with -- a completely pre-tax 401(k) can be rolled over to a Traditional IRA without any loss of efficiency; a completely Roth 401(k) can be rolled over to a Roth IRA without any tax.

Given this, is it a bad idea to have both pre-tax and Roth contributions in a 401(k)?

  • Consider: While ending up with a 100% pre-tax 401(k) is possible, ending up with a completely Roth 401(k) is difficult or even impossible for some. Consider: Roth contributions were only possible as early as 2006. Moreover, all employer contributions to a 401(k) are made on a pre-tax basis, even if the employer contribution is matching employee Roth contributions. See related question Recent graduate with new job: Choose Roth 401(k), or traditional 401(k)? Feb 12, 2013 at 13:23
  • Recent legislation now permits a conversion from Traditional 401(k) to Roth 401(k) - rothmania.net/introducing-the-roth-401k-conversion so for those wishing to retire virtually tax free, they can use the Roth 401(k) and even convert the company matches every year. Feb 12, 2013 at 14:03

1 Answer 1


There's a bit of confusion here.

Michael's article you linked is focused on the issue of post-tax 401(k) deposits. For those new to this, it sounds like we are talking about Roth 401(k) money. Not so. The Roth IRA was introduced in 1998, and the Roth 401(k) in 2006. Before '06, people had the ability to deposit more to their 401(k) than the pretax limit of $15,000 into the account as "after tax" deposits. My understanding is that these funds were analogous to the non-deducted IRA deposits for those outside the income limits.

Michael goes on the point out that now, with the addition of Roth 401(k) and Roth IRAs, there are folk with pre and post Tax 401(k) funds and trying to crack them for transfer to Traditional IRA and Roth IRA may be problematic.

Aside from a recent thread here, there are separate accounts for the Roth 401(k) and Traditional 401(k), and it's possible for the traditional to contain post tax money, which, given the recent introduction of the Roth 401(k) conversion, should be easily addressable.

  • 1
    cool. i learn something new every day
    – user102008
    Feb 12, 2013 at 19:39
  • Glad I could be part of that learning for you today! Feb 12, 2013 at 19:56
  • so does that mean that I can rollover my Roth 401k to a Roth IRA and leave the Traditional 401k untouched?
    – user102008
    Feb 12, 2013 at 22:24
  • Yes, if you are no longer with the company, and they treat these as separate accounts. Much of the IRS regs is written as "may" not "must" when dealing with what companies can and can't do. Feb 12, 2013 at 23:21

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