Roth 401k Rollover to Roth IRA

Submitted by scccc- t3_127xvog in personalfinance

https://ibb.co/xmMshZv

Not sure if I understand this screenshot correctly. My Roth 401k is only invested in FXAIX and all my contributions have been after-tax money. I'm pretty sure "Pre-Tax Assets ($239.54)" is referring to my total gains from the mutual fund. If I do this rollover & select "Keep the same mutual funds, where possible", is it going to just move FXAIX into my ROTH IRA or sell my stuff? Additionally, do I now immediately owe taxes on the pre-tax assets that I'm rolling over or is it just telling me that I have this much pre-tax assets and the tax-deferred status will maintain until I'm 59?

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I called the 401k and IRA department at Fidelity but I don't think they understood or I explained this badly.

Edit: They also told me that the pre-tax asset would be moved into a Traditional IRA and After-tax asset would be moved into Roth IRA. But I don't know if this is true. I don't have a Traditional IRA.

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DeluxeXL t1_jegbg6b wrote

It is likely the Roth earnings, considering that the only valid destinations are Roth IRA or Roth IRA. Calling it pretax is just weird.

If it were pretax employer match, valid destinations would have included traditional IRA.

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scccc- OP t1_jegcdc4 wrote

It is very very close to how much earnings I see on the funds so I think it is my earnings. I’m assuming it’s because it’s a mutual fund that’s why it’s off. Does that mean if I do the rollover, its just going to maintain the tax deferred status and I’m not penalized or need to pay taxes on it immediately? Just as if I were to keep the funds in the 401k, but I’m just moving it’s location?

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DeluxeXL t1_jegcn1f wrote

It is going to maintain exactly the same balance type. Roth to Roth rollover follows a simple rule: Every type of balance keeps its own identity. Roth 401k contributions become Roth IRA contributions. Roth 401k conversions (such as megabackdoor Roth) become Roth IRA conversions. Roth 401k earnings become Roth IRA earnings.

There is no tax now.

There is no tax ever (assuming you only do qualified withdrawals).

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scccc- OP t1_jeggw40 wrote

Thanks. Your answer is very precise and clear, unlike the fidelity description. I understand now

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Foreign_Afternoon_49 t1_jegfegz wrote

I think "pre-tax" means earnings (because they haven't been taxed yet and could, potentially, be subject to taxation if you withdraw them instead of rolling over).

As for the roller/conversion, I think they'll sell what you have and purchase it again in the new account. The difference in value should be minimal if they sell and buy within the same day or two. But of course it's possible if the market crashes or something, that the value will change.

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scccc- OP t1_jegh13t wrote

Thnxxx. That pre-tax thing and the reps I talked to just really confused me.

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DeluxeXL t1_jegj1r0 wrote

Unless you spoke to the plan rollovers department (someone at Fidelity finally gave me their number after I complained that I was transferred over 15 times), most of them don't really know the tax stuff.

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scccc- OP t1_jegj928 wrote

Lolll YES, they kept transferring me between their IRA and 401k department

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