Personal Investments • Help with Roth IRA / After-tax contributions

Age: 28, Single
State: MI
Tax Rate: 24% federal, 6% state
Debt: 19k car loan @ 1.75%

Hi All,

I am trying to improve my knowledge about investing and had a few questions regarding Roth IRAs, 401K pre-tax
and after tax contributions, etc.

Currently I have an employer 401k with a 5% match. I am contributing approx $940 every two weeks, so that my
contributions will add up to the IRS limit of 23k. My plan offers after-tax contributions of up to 10%, which
are non-roth. I don't have a Roth IRA currently, only my current employer 401k and a previous 401k.

My employer 401k plan does not allow for in-plan automatic conversions of any after-tax contributions, and
therefore I will need to call them and manually do an in-service withdrawal. So here's my plan:

1. I will open a Roth IRA and fund it immediately with $7k from checking.

2. I will contribute 10% after-tax, and then after it has been contributed, call Fidelity and have them do
an in-service withdrawal. Contributions will go to the Roth IRA, and any earnings will go to a rollover IRA?

3. Currently my income is below the Roth IRA IRS income limit. However, I have a side job (LLC), and may
have an upcoming contract and thus may increase my gross income above the IRS limit. If I contribute to the Roth IRA now,
and then later in the year my income goes above, what happens? Do I have to pay a penalty? What happens to any of
the after-tax contributions if I move them to the Roth IRA?

I don't quite understand how to go about the after-tax contributions. I want to make sure I'm going about this most
efficiently and not breaking any rules with the IRS.

Any help is appreciated.

Thanks

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