Can one roll over an after-tax 401(k) to a Roth IRA, then any time in the future withdraw one's contributions (that were initially made to the after-tax 401(k)) tax-free and penalty-free?

Background information: in the United States, traditional (a.k.a. pre-tax)/Roth/after-tax (a.k.a. post-tax) 401(k) may be rolled over as follows:

  • A traditional 401(k) may be rolled over to a traditional IRA or Roth IRA if older than 59.5-year-old or if leaving one's job.
  • A Roth 401(k) may be rolled over to a Roth IRA if older than 59.5-year-old or if leaving one's job.
  • A Roth 401(k) may not be rolled over to a Roth IRA.
  • An after-tax 401(k) may be rolled over to a Roth IRA anytime if the 401(k) plan allows it (a.k.a., "mega Roth IRA backdoor")
  • An after-tax 401(k) may be rolled over to a Roth 401(k) anytime if the 401(k) plan allows it (a.k.a., "in-plan Roth conversion")

Also, from https://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/roth_ira/withdrawal_rules (mirror):

You can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free.

  • 2
    Where did you get your list of ‘what is allowed’ from? I think it’s wrong. Line 1, you can of course convert a 401(k) to a Roth IRA, without being 59.5 or leaving the job. I just did that. Unless your point is the word ‘rolled’ - it’s not a roll-over, it’s a conversion.
    – Aganju
    Commented Nov 14, 2017 at 2:40
  • @Aganju I was trying to compile a list. What type of 401(k) are you talking about, and how did you convert it to a Roth IRA? I am new to the US retirement plans so any feedback is welcome. Commented Nov 14, 2017 at 2:49
  • A 401(k). My employer offers that option directly; but it doesn’t matter. You just make a withdrawal, and pay the money within 60 days into the Roth. You owe taxes for it, of course.
    – Aganju
    Commented Nov 14, 2017 at 2:50
  • @Aganju Do you mean you withdrew money from your pretax 401(k), and placed it into a Roth IRA? Commented Nov 14, 2017 at 2:52
  • Downvotes without comment don't help me learn. Commented Nov 14, 2017 at 18:05

2 Answers 2


From comments to another answer, it appears you are talking about after-tax contributions to a traditional (non-Roth) 401(k). Note that the after-tax amount does not change as the value of the traditional 401(k) changes (i.e. earnings are always pre-tax), so unless you just contributed, you likely have a mix of pre-tax and after-tax money in your traditional 401(k).

When you withdraw or rollover from the traditional 401(k), the withdrawal is deemed by the "pro-rata rule" to consist of pre-tax and after-tax amounts in the same proportion as in the overall traditional 401(k) (so you can't choose to withdraw or rollover just the after-tax part), but IRS Notice 2014-54 (mirror) allows you to split a rollover such that the pre-tax part goes to Traditional IRA and the after-tax part goes to Roth IRA, effectively unmixing the two parts. I will assume you did split it in such a way, so that all the money going to Roth IRA is after-tax, and thus incurs no tax for the conversion.

For the purposes of Roth IRA distribution, I believe this would be treated as a "conversion", and not a "contribution". If you withdraw money from a "conversion" (which can only happen after you've already withdrawn all "contributions", as those are ordered first), there is never a tax but there may be a penalty for a withdrawal within 5 years of the conversion under certain conditions (as opposed to withdrawing "contributions", which never have any tax or penalty). Specifically, there is a 10% penalty on the portion of the conversion that was taxable. Since none of the conversion we talked about above was taxable, there will be no penalty upon withdrawing it within 5 years. (Note that conversions are ordered by year, so be careful if you had another conversion within 5 years in a year prior to the year of this conversion.)

  • Thanks for the clear answer (the short answer to my question being "yes"). "For the purposes of Roth IRA distribution, I believe this would be treated as a "conversion", and not a "contribution"." -> isn't moving after-tax 401(k) to a Roth IRA a rollover? web.archive.org/web/20171115223659/https://www.bogleheads.org/… seems to say that it's called a rollover. Commented Nov 15, 2017 at 22:37
  • Quote from the link "Technically, that last scenario in which funds are transferred from an employer plan to a Roth IRA is called a "qualified rollover contribution". It's often referred to as a conversion but a conversion is limited to a non Roth IRA to Roth IRA rollover or transfer, ie. involves IRAs only. The new "in plan" transfers from a pre tax 401k to the designated Roth option are called "IRRs" ie. inplan Roth rollovers." Commented Nov 15, 2017 at 22:38
  • " it appears you are talking about after-tax contributions to a traditional (non-Roth) 401(k). " -> thanks, I wasn't aware that after-tax, non-Roth contribution were going to the traditional 401(k), i.e. to the same account where the pre-tax 401(k) contributions are going to. Commented Nov 15, 2017 at 22:41
  • @FranckDernoncourt: You can call it "rollover" or "conversion"; a "conversion" is just a special kind of rollover. In any case what matters is which of the 3 categories it falls into for Roth IRA distribution treatment: 1) "regular contributions", 2) "conversion and rollover contributions", or 3) "earnings". And I believe it falls under the second became it came from a non-Roth account.
    – user102008
    Commented Nov 16, 2017 at 3:03

Assuming that the after-tax 401(k) refers to a Roth 401(k), then yes, you can withdraw your original contributions to the Roth 401(k) tax-free and penalty-free, assuming you meet the IRS rules for Roth 401(k) rollovers, as illustrated by this example:

Bob receives a $14,000 eligible rollover distribution that is not a qualified distribution from Bob’s designated Roth account, consisting of $11,000 of basis and $3,000 of income. Within 60 days of receipt, Bob rolls over $7,000 of the distribution into a Roth IRA. The $7,000 is deemed to consist of $3,000 of income and $4,000 of basis. Because the only portion of the distribution that could be includible in gross income (the income) is rolled over, none of the distribution is includible in Bob’s gross income.

In this example, Bob was able to withdraw $7k of the basis without tax or penalty. However, the earnings from the Roth 401(k) would have been taxable if he had not rolled that portion over.

Generally, you can also withdraw your Roth 401(k) rollover distribution, if you meet the five-year rule for qualified distributions.

This article from Investopedia has the caveats:

From Roth 401(k) to IRA

If the rollover is to a Roth IRA instead, the holding period within the Roth 401(k) does not carry over. That is, if the client has an existing Roth IRA, once the Roth 401(k) distribution is in the account, it has the same holding period as the Roth IRA funds. Let's assume, for example, that the Roth IRA was opened in 2000. You worked at your employer from 2006-2009 and were then let go or quit. Because the Roth IRA that you are rolling the funds into has been in existence for more than five years, the full distribution rolled into the Roth IRA meets the five-year rule for qualified distributions. On the other hand, if you did not have an existing Roth IRA and had to establish one for purposes of the rollover, the five-year period begins the year the Roth IRA was opened, regardless of how long you have been contributing to the Roth 401(k).

Per this IRS Roth comparison chart, the following rules apply for Roth 401(k) distributions:

Withdrawals of contributions and earnings are not taxed provided it’s a qualified distribution – the account is held for at least 5 years and made:

  • On account of disability,
  • On or after death, or
  • On or after attainment of age 59½.

For the Roth IRA, the following rules apply:

Same as Designated Roth 401(k) Account and can have a qualified distribution for a first time home purchase

RothIRA.com also has a list of circumstances where funds can be withdrawn tax-free and penalty free:

Qualified Distributions

  1. You’re totally and permanently disabled
  2. You’re inheriting a Roth IRA from someone else
  3. You’re buying a first home

Anything from the Roth IRA withdrawal that doesn’t meet the definition of a qualified distribution is a non-qualified distribution. That doesn’t mean, that you have no chance to escape Roth IRA early withdrawal penalties. The IRS gives you some leeway for making penalty-free withdrawals if:

  1. You’re taking a distribution to pay unreimbursed medical expenses
  2. You need to pay your health insurance premiums while you’re unemployed
  3. You’re using the money for qualified higher education expenses
  4. You’re taking substantially equal payments from the plan
  5. The withdrawal was due to a tax levy
  6. You’re a qualified reservist

So in summary, you need to make sure you're taking a qualified distribution from your Roth IRA, whether or not it contains funds from a rolled-over Roth 401(k). Make sure you consult with your accountant/tax professional to make sure your plans comply with IRS rules for qualified distributions.

  • 1
    Thanks! "Assuming that the after-tax 401(k) refers to a Roth 401(k)" --> sorry, what do you mean? Aren't an after-tax 401(k) and a Roth 401(k) two different types of 401(k)? Commented Nov 14, 2017 at 5:23
  • @FranckDernoncourt, according to the IRS comparison chart I linked to, there are only 2 types of 401(k) - the traditional and Roth versions.
    – JW8
    Commented Nov 14, 2017 at 5:25
  • Interesting. When I read some documents regarding my 401(k) plan, I was under the impression that there exist an after-tax 401(k) plan, e.g.: web.archive.org/web/20171114053328/https://… " You can roll over pre-tax, Roth, and traditional after-tax contributions from a former employer’s plan into your Adobe 401(k) Plan.". Maybe it's not called after-tax 401(k) :-/ What's the name of the type of source account that we use to perform a "mega Roth IRA backdoor"? Commented Nov 14, 2017 at 5:36
  • Before there were Roth 401K accounts, there were pre-tax and post-tax accounts. In fact In the 401K program I joined in the late 1980's there was also a pre-1987 post-tax account, but I have no idea what the rules are for that. In my quarterly statements they actually call the post-tax account a post-1986 post-tax account. While Roth and post-1986 post-tax are similar in that it is post tax money, it didn't have all the benefits of the Roth. There is no requirement that your 401K plan has post-tax and/or Roth options. Commented Nov 14, 2017 at 11:18
  • "if you meet the five-year rule for qualified distributions." No. Contributions in a Roth IRA can always be withdrawn at any time without tax or penalty.
    – user102008
    Commented Nov 14, 2017 at 15:12

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