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 so you don’t make the same mistake.

Step 1: Check Your Eligibility

Before starting the in-plan Roth conversion process, ensure your employer offers the option to convert online.

1. Go to Account, select ‘401(k) Plan’ and then ‘Balance’ from the drop-down window. 

2. Locate the Roth Conversion Tab

1. If your employer allows online conversions, you will see a ‘Roth Conversion’ tab. Select it.
2. If not, you will need to submit a form.

Step 2: Acknowledge the Irreversibility

Be aware that an in-plan Roth conversion is irreversible. Click ‘Continue.’

Step 4: Confirm Your Citizenship Status

1. Select ‘Yes’ or ‘No’ depending on your status and then click ‘Continue’
   • If you select ‘No,’ you will need to submit a form 

Step 5: Enter your social security number and click ‘Continue’

Step 6: Specify Your Conversion Amount

1. Enter 100% for ‘Employee After-Tax’ so all after-tax 401(k) contributions are converted.
   • Convert after each paycheck to minimize growth (and taxes).
   • Leave employer match to 0% as that money is usually in pre-tax 401(k), which will be taxed if it’s converted to Roth.
2. Click ‘Continue.’

Step 7: Verify everything is correct and click ‘Submit.’

All done! Check your balance in 1-3 business days to verify the conversion went through.