If one moves their balance from one 401(k) to another (e.g. change of employers), the new administrator receives the necessary tracking information and is required to continue tracking the basis in the designated Roth account (i.e. Roth subaccount).I’m surprised that it all being in the fidelity family they wouldn’t track the basis for you after converting.The drawback to withdrawing to Roth is you have to keep track of the basis in case at any point you want to withdraw contributions. In the in-plan the plan tracks the basis. However the Roth IRA has more favorable withdrawal rules and more investment choices.”
See relevant regulation below:
Conversely, if one performs a 401(k) rollover to a Roth IRA, the administrator issues a 1099-R and the individual must keep track of their own basis at this point. Brokerage firms are not required, or frankly have the ability, to track basis in our Roth IRAs. That is because the IRS views all IRA accounts in aggregate by type. All traditional IRAs as one and all Roth IRAs as one.
Q–2. In the case of an eligible rollover distribution from a designated Roth account, what additional information must be provided with respect to such distribution?
A–2.
(a) Pursuant to section 6047(f), if an amount is distributed from a designated Roth account, the plan administrator or other responsible party with respect to the plan must provide a statement as described below in the following situations—
(1) In the case of a direct rollover of a distribution from a designated Roth account under a plan to a designated Roth account under another plan, the plan administrator or other responsible party must provide to the plan administrator or responsible party of the recipient plan either a statement indicating the first year of the 5-taxable-year period described in A–1 of this section and the portion of the distribution that is attributable to investment in the contract under section 72, or a statement that the distribution is a qualified distribution.
(2) If the distribution is not a direct rollover to a designated Roth account under another plan, the plan administrator or responsible party must provide to the employee, upon request, the same information described in paragraph (a)(1) of this A–2, except the statement need not indicate the first year of the 5-taxable-year period described in A–1 of this section.
(b) The statement described in paragraph (a) of this A–2 must be provided within a reasonable period following the direct rollover or distributee request but in no event later than 30 days following the direct rollover or distributee request.
Fidelity does not know if you also have a Roth IRA account at Vanguard, Charles Schwab, Etrade, Robin Hood, etc. so they're incapable of tracking the basis.
Statistics: Posted by Moniker — Sun Jan 12, 2025 1:30 pm