I made a critical error filing out Empower’s in-plan Roth conversion form which cost me $70,580 in taxes. Instead of converting only my after-tax contributions, I accidentally converted my entire 401(k) balance.
Here is a step-by-step tutorial on how to convert after-tax 401(k) contributions to Roth 401(k) in-plan. If you don’t have the option to convert online, you will need to submit a form.
Step 1: Go to ‘Account’ and click on ‘Plan forms’ located on the bottom left
Step 2: Complete ‘Personal Information’ section
- This is on page 2, section A with my version
- Add social security number, full name, date of birth, phone number, and citizenship.
Step 3: Complete ‘Conversion Election’ section
- This on page 2, section B with my version
- I check ‘NO’ as I have not separated from employment/retired.
- Enter 100% so all after-tax contributions are converted.
- Make sure to submit a conversion request after each paycheck to minimize growth and taxes.
- IMPORTANT: Select ‘after-tax monies (AFT)’ to convert ONLY after-tax 401(k) contributions. Other options may require a hefty tax bill (I learned this the hard way).
Step 4: Complete page 3
- Write your last name, first name, and social security number on the top of the page.
- If you are a U.S. Citizen or U.S. Resident Alien, skip this section. Otherwise, complete it.
Step 5: Handwritten signature and date are required
Step 6: Upload completed forms to Empower
- Go to ‘Account’ and select ‘Upload documents’ from the left-hand bar
- Select ‘Incoming rollover’ under document type and attach completed form before clicking ‘Upload’
Finally done! Check your balance in 1-3 business days to ensure the conversion went through.