I turned 70 1/2 this year and I am retiring before the end of the year. I understand I need to take my RMD from my 401(k) before I can transfer it to an IRA. I have before-tax and after-tax money in my 401(k). If I move it to an IRA, can the after-tax money be moved to a Roth IRA instead of receiving a check for that amount? Thank you.

IRS Notice 2009-68 says that if a direct rollover of only part of your funds is made (and some is paid to you), each distribution includes a pro-rata amount of the after-tax funds. It appears that the only way you could rollover only the pre-tax funds to your IRA and only the after-tax money to your Roth IRA would be to have the entire amount paid to you (i.e., not choose a direct rollover) and use the 60-day rollover rule. You could then fund the IRA first and the Roth IRA last. However, the 20% withholding rules would apply to the pre-tax portion. You would have to be able to make up the withheld amount from other personal funds. Any overpayment of taxes would be refunded to you when you file your tax return. This is a controversial topic and tax advice is needed. Further IRS clarification is needed. Your RMD cannot be rolled over.

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