Just submitted to do the 401 Roth option, for a small amount as my increase in contributions this year. For those who have it while I wait to see, can I use the Roth contributions to contribute to a new fund and see it as its own account, or are the contributions all tied to the same contribution scheme and the amounts are just accounted for in the statements and at the end of the year in a tax document? Thanks…
Ask your employer. I suspect Roth investments will be separate accounts even if invested in the same funds both ways. Your employer should be able to explain how your plan does things.
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I would agree, it has to be different investments/screens. That would make it a lot easier to invest and navigate. I will ask at my employer, but most likely they won’t know…unfortunately calling the administrator is a pain of waiting.
If your administrator is a major like Fidelity or Vanguard they are usually responsive to questions.
You need to check your Summary Plan Description (SPD), or contact the administrator, as the answer to this question is completely up to how the employer and the administrator have set up the plan.
I will warn you that if you have a Fidelity Brokerage Link account and are investing both Roth and pre-tax funds in the Brokerage Link account, they are likely to be combined, and you will have issues in separating the investments in the future. I know this from my BF’s personal experience.
Edited to add: Just to add some additional clarity - say you had $10k of Roth and $20k of pre-tax in your Brokerage Link account. If you wanted to buy $15k of Tesla stock, Brokerage Link would assign $10k to the pre-tax account and $5k to the Roth account. Then say the stock doubled, so you had $20k of Tesla in the pre-tax account and $10k in the Roth account. If you wanted to sell $15k of the Tesla stock, Brokerage Link will take $10k from the pre-tax account and $5k from the Roth account. You are not able to just sell $15k from the pre-tax account - all purchases and sales are pro-rated. My BF didn’t realize this until he had made purchases, so he just let it ride until he got to a point where he could sell everything and move the Roth money out to an IRA. So now he has only pre-tax money in his Brokerage Link.
AJ
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