topic I live in Ny. I Contributed after tax money to my 401k ($14k) and need to withdraw it because I cannot roll it over into 401k with my new employer. What’s the tax impact? in Retirement tax questions

I live in Ny. I Contributed after tax money to my 401k ($14k) and need to withdraw it because I cannot roll it over into 401k with my new employer. What’s the tax impact?

lejlaalagic — Tue, 10 Feb 2026 10:08:17 GMT

Re: I live in Ny. I Contributed after tax money to my 401k ($14k) and need to withdraw it because I cannot roll it over into 401k with my new employer. What’s the tax impact?

dmertz — Thu, 11 Jan 2024 16:08:12 GMT

Odd that a 401(k) would not permit after-tax money from another 401(k) to be directly rolled over to that new 401(k). However, the tax code prohibits including any after-tax basis in an indirect rollover to a 401(k) and rollovers from IRAs to a 401(k).

Even if the after-tax basis can be directly rolled over from the old 401(k) to the new 401(k), it's almost certainly better to roll the after-tax basis over to a Roth IRA and roll over to the new 401(k) (or to a traditional IRA) only the pre-tax money from the old 401(k). The old 401(k) can do a direct rollover of the pre-tax portion, thus avoiding mandatory tax withholding, while distributing the after-tax basis to you which you can then deposit into a Roth IRA as a nontaxable conversion. The result would be zero tax impact.

Unless you waive the obligation, a 401(k) is required by law to provide you a description of your rollover options prior to making any distribution.

Re: I live in Ny. I Contributed after tax money to my 401k ($14k) and need to withdraw it because I cannot roll it over into 401k with my new employer. What’s the tax impact?

Opus 17 — Thu, 11 Jan 2024 16:29:35 GMT

When you separate from service, you are allowed to withdraw funds, or roll them over to an IRA or another qualified plan.

Since the new plan will apparently not accept a rollover containing after-tax money, I would start by asking the old 401K to rollover the after-tax portion to a Roth IRA, either with them or with another broker. Then the new plan should accept the remaining funds.

You also don't have to rollover any money to the new employer, you could rollover everything to a combination of a private IRA and a private Roth IRA. In my experience, 401k plans offer mutual funds with lower expense ratios and fees than private IRAs, but private IRAs have more investment choices. I wouldn't necessarily stick with the new 401k unless you really like the investment choices.