I have a Roth balance. What do I need to know before I transfer?

Understanding Your Roth Balance

If your employer-sponsored plan (like a 401(k) or 403(b)) has a Roth option, and you've contributed to it, you already have a Roth balance! This means you've been saving for retirement with after-tax dollars.

Here's how Roth balances differ from Traditional balances:

  • Roth:
    • You contribute after-tax dollars, meaning you pay taxes on the money before it goes into your account.  
    • Qualified withdrawals in retirement are completely tax-free!
  • Traditional:
    • You contribute pre-tax dollars, which often reduces your current taxable income.
    • You'll pay taxes on withdrawals in retirement.

Rolling Over Your Roth Balance:

Maintain the Roth advantage: Because your Roth balance is already funded with after-tax dollars, you must roll it over to another Roth account to preserve its tax-free status in retirement. This means you can choose either:
  • Roth IRA: This is a personal retirement account you can open at a financial institution of your choice.  
  • Roth 401(k) or similar plan: If your new employer offers a plan with a Roth option, you can transfer your Roth balance directly.
Not sure if your plan accepts Roth rollovers? Check your employee portal or contact us at transfers@usemanifest.com. Our team is happy to help!

The frequently asked questions, or FAQs, are intended to be helpful and to get you thinking in a more sophisticated manner about your account transfer and related issues. However, these are not meant for accounting, tax, finance, or legal advice, not intended to be exhaustive, and do not create any relationship or duty on our part to assist your particular situation. We offer no warranties on the accuracy or completeness of the information as there could be developments of any kinds, including, but not limited to, any changes in relevant laws and regulations.