> Pre-tax and after-tax 401K accounts are considered separate pools, so for the aforementioned after-tax 401K to Roth IRA rollover, no tax will be paid on pro-rata basis based on the amount I have in pre-tax 401K.

Is this true, or am I missing something? I came across this link. It basically says that we do need to pay tax on a pro-rata basis if we are rolling over from an after-tax 401K account.

https://www.irs.gov/retirement-plans/rollovers-of-after-tax-contributions-in-retirement-plans

Can I roll over just the after-tax amounts in my retirement plan to a Roth IRA and leave the remainder in the plan?

No, you can’t take a distribution of only the after-tax amounts and leave the rest in the plan. Any partial distribution from the plan must include some of the pretax amounts. Notice 2014-54 doesn’t change the requirement that each plan distribution must include a proportional share of the pretax and after-tax amounts in the account. To roll over all of your after-tax contributions to a Roth IRA, you could take a full distribution (all pretax and after-tax amounts), and directly roll over:

• pretax amounts to a traditional IRA or another eligible retirement plan, and
• after-tax amounts to a Roth IRA.

Thank you very much for your help!

As I mentioned earlier, my traditional IRA account does not have any pre-tax contributions. It, however, does have a small amount of gain (about $150), which is obviously not taxed (yet). I was wondering that in order to avoid the complications with pro-rata tax calculation associated with my regular backdoor Roth conversion (after-tax traditional IRA to Roth IRA) that I do every year, if it's better to simply not have any pre-tax money in my traditional IRA account. This will mean that I move this $150 too to the Roth IRA. However, I'm not very clear about the process. Do I just move the entire $150 now, and then pay the tax on that $150 when I file my taxes next year? Thanks!

I think it does, but I will double check. Thanks for mentioning this.

I see. If I understood it correctly,

1. Pre-tax and after-tax 401K accounts are considered separate pools, so for the aforementioned after-tax 401K to Roth IRA rollover, no tax will be paid on pro-rata basis based on the amount I have in pre-tax 401K.

2. However, for IRAs, pre-tax and after-tax IRAs are considered as part of the same pool, so for after-tax IRA to Roth IRA conversion, the pro-rata rule is in effect if I have funds in pre-tax IRA account.

Is that correct? Thank you.

Great, thank you. The after-tax contribution was made only a couple of weeks ago, and the funds are just sitting in a bank account, so there's no gain/loss yet. But I get the idea. So I guess all I need to do is just move the funds from my after-tax 401K account to my Roth IRA account. Is there any tax form I need to fill out, or any other documentation I need to keep?

On that topic of after-tax contributions vs gain/loss from it, does the same rule apply when I am trying to do a regular (not mega) backdoor Roth conversion, that is, from my traditional after-tax IRA to Roth IRA? The traditional IRA account has a small gain (about $150). However, every year when I contribute to it (for example, $6000 this year), I just immediately convert it to Roth IRA. Is that okay, or am I supposed to pay tax on a pro-rata basis due to that small pre-tax gain?