One of the most hotly debated issues in the retirement planning community has been whether a client with pretax and after-tax employer-plan money can roll it over in two parts — moving that after-tax cash to a Roth IRA tax-free, that is, while also directly moving the pretax money into a traditional IRA.
In the past, the IRS had issued several ambiguous and contradictory rulings that wound up clouding the issue, creating more doubt as to whether after-tax plan funds could be converted to a Roth IRA tax-free. But a new IRS notice provides an emphatic answer: Yes, they can.
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