pretax- 401 K to Roth 401K conversion without pro rata rule ?

[PhatFrancis]

Hello.

Thank you for your help.

 I have three retirement accounts and would like to do a conversion of a pre-tax  401K (#1 account ) to Roth 401K  through current employer plan  (which allows in-plan roth 401K conversion).

 The two other accounts:   #2 account )  traditional IRA from Vanguard ( established 28 years ago)

                                              #3 account )  a pretax- 401K kept with previous employer plan ( 20 years ago)

Can I still do the conversion of account #1 and not worry about #2 and #3 regarding pro rata rule since #1 is a 401K from an employer plan that permits in-plan conversion? 

Please advise if this can be done.

Thanks!

[MindyB · Accepted solution]

Yes, you can proceed with the conversion of Account #1 without worrying about the balances in your Vanguard IRA (Account #2) or your old 401k (Account #3). 

The pro-rata rule and the IRA aggregation rule only apply to conversions involving Individual Retirement Accounts (IRAs), because your conversion is happening entirely within an employer-sponsored 401k plan, the IRS treats it as separate.