Rolling after tax 401K funds into a Roth IRA

There's a discussion of this topic on MorningStar's site:

http://socialize.morningstar.com/NewSocialize/forums/thread/203550.aspx

This is complex, so you should talk to a licensed expert, but it looks like there are two approaches:

1) Take out just the after tax contributions and put that into the Roth IRA. If you take out the earnings associated with your after tax cost basis, then you would have to pay taxes on those earnings.

2) Transfer your 401(k) balance to your traditional IRA. Then, you can convert all or part of this to a Roth IRA, but it is done on a prorata basis. That is, in the year of your Roth conversion, if the % of all of your your traditional IRAs that is basis (after tax contributions) is 20%, then 20% of your conversion will not be taxable (ordinary income) to you.

You can follow this through on form 8606, part II, which you can see at

http://www.irs.gov/pub/irs-pdf/f8606.pdf

If you want to talk to someone about an IRA Rollover you can read more here and inquire to have someone contact you:

http://www.newretirement.com/Services/Rollover.aspx