• Question
  • RMD withdrals - cost offset?

    Asked by someone from Fiskdale, MA on 7/30/2019

    My 401 account deposits were initially funded by after-tax payroll deductions. Later I was able to make both pre-tax and after tax payroll deductions for deposit in my 401.

    Now as I am receiving 401 RMD payments, I expect that some of those funds are a return of my after-tax contributions of years ago. Currently, it appears that the full RMD distribution is treated as taxable.

    Is their no provision to avoid tax on my after- tax contributions?

  • Categories: Retirement Assets and Savings, Withdrawals


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  • If your after-tax contributions remain in your employer plan they will be part of the RMD calculation. If you are no longer working at your employer, you are able to roll these funds directly into a ROTH IRA...in this case they will no longer be part of the RMD calculation. While your initial contribution will roll over tax free, any gains on the money will be taxed as income rates, not capital gains rates.

  • Login to rate this answer:   Answered on 8/12/2019
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.