The earnings would still be taxable in the after tax 401k, so that’d be the advantage of converting it to Roth, esp when the gains are relatively low.
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In that case it sounds like the only advantage is cramming a larger amount of $$ into a Roth eventually at the cost of having a much smaller but likely tolerable set of investment options.
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It depends on the employer. If in-service conversions are allowed and the investment selection is acceptable (i.e., low expense funds), then it easily beats out the alternative of a taxable account. Further, upon termination, it can be rolled into a Roth IRA without any new taxable event and avoiding pro-data issues.
Def not for everyone, but something that should be considered for actuarial-types and similar.
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I pulled up the SPD, and I can indeed withdrawal after-tax 401k contributions at any time, so that’s good to know.
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That’s the holy grail of 401k benefits (besides high employer contributions)
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Well my boss met with the powers that be and me back called and said he didn’t think we were going to be able to agree on a price. My company gives you a total compensation page, it tells you every dollar they spend on you. I took that amount from last year, divided by the number of hours, and rounded up a bit to get $X.
I told him I think I’m worth $X but I’ve decided I’m willing to go as low as (0.80-0.85)X. he said we were still so far apart he wouldn’t even tell me how far. My company has always underappreciated actuaries and under these circumstances I am very happy to walk away. GOOD RIDDANCE.
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Welcome to retirement!
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Good for you. They sound like cheapskates.
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If they come back a few months into your retirement and say we’d like you for 80-85% of X, might be time to say, no, now a post retirement premium is in order.
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This sounds like a non deductible IRA for those above the max limit of trad ira/401k. You fund it and leave it in something that earns 0 overnight and "backdoor " convert to a roth before any gains were made.
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Well, I don’t know what kind of part-time remote employment I’m going to find out there. 0.8X might still look pretty good.
I have a lot of unused PTO: carried over 5 and earned 7 in the first three months of 2024. I’ve never let a day go to waste in my life until now. I thought it would get paid out but it doesn’t. So then I started taking it. The boss called at 5pm and told me I need to use it up in the system. We used to track our PTO in a spreadsheet but it just got transferred to online two months ago.
So, I tried using up my PTO and now I’m more or less off until I retire 
I will monitor my email and respond to a few things and have a couple conference calls with my boss about transitioning. But I’m actually going to clean out my office tomorrow as opposed to next week when I was expecting to.
It’s a very weird anticlimactic feeling; I’m thrilled not to have to trudge back into work. I began work on something yesterday that was going to take a few days until this wave of PTO crashed over me in which case I have decided: OK, someone else can deal with this.
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warms my heart
Handing projects off when quitting is a wonderful feeling. Even better, I’d imagine, when retiring.
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I’m retiring soon and already handed off a monthly recurring project. Very satisfying.
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Just finished my estate planning via my lawyer and investment manager. As a retired actuary, I thought I was pretty knowledgeable in this regard but I learned a lot of new stuff to facilitate transfers of assets and avoid any estate or income tax on my or my wife’s death. I recommend to do this at an earlier age than I did it.
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Really? You have thought this out? At first I didn’t think this was possible, but I finally figured out it might be possible, but quite improbable.
With respect, I don’t request that you share any truly personal financial information, but is it possible to generically describe how this is beneficial to you?
As I see it, deferring income taxes as long as possible is the optimal tax minimization strategy for the vast majority of people.
Right now my largest chunk of assets is in taxable brokerage accounts. The next large piece is in IRA/401K accounts. I have a pretty small relative balance in a Roth now. We will be living off taxable accounts and pension income first and tapping the IRA’s later.
I’m projecting what our IRA balance might look like when RMD’s are required. Add the required RMD income on top of SS and pension income to see what the tax rate might look like then, vs taking some tax pain over the next several years with Roth conversions.
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Ok, here’s why I was confused. You are at retirement stage now, is that correct?
I thought you were saying that you were taking down IRA money while still in your working years.
Yes, retired now.
I was still getting deferred income through 2023, so it wouldn’t have made sense to do any Roth conversions before this year as they would have stacked on that income. 2024 is where it made sense to start implementing the strategy in my case.
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It mostly depends on how much you think your assets will grow vs taxable income (esp when forced to take RMDs)
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