To do a Roth in-plan conversion on Fidelity, confirm your employer’s plan document allows it, log in to NetBenefits (or call Fidelity Workplace Investing) to move money from your pre-tax or after-tax 401(k) source into the plan’s designated Roth account, and set aside cash outside the plan to pay the resulting tax bill. The conversion happens entirely inside your 401(k), nothing rolls to an outside IRA, and once it’s done, it cannot be undone.
Confirm Your Plan Allows the Conversion
Not every 401(k) offers this feature. Your employer’s plan document decides whether in-plan Roth conversions exist at all, which money sources are eligible, and whether active employees can convert at any age or only after 59½.1Internal Revenue Service. In-Plan Roth Rollovers Phone Forum
Log in to Fidelity NetBenefits, open your 401(k), and pull up the Summary Plan Description or Plan Information document. That’s where the rules live. If the SPD isn’t clear or you can’t locate it, call the Fidelity Workplace Investing number on your plan statement and ask a representative to confirm which conversion types are available and what restrictions apply. Some plans allow after-tax conversions at any time but limit pre-tax conversions to participants who are 59½ or otherwise eligible for an in-service withdrawal.
Decide Which Money to Convert
Three pools inside a 401(k) can potentially be converted, and each is taxed differently the moment it lands on the Roth side.
- Pre-tax deferrals and their earnings. The full amount converted counts as ordinary income in the year of the conversion because none of it has ever been taxed.
- Vested employer contributions, including matching and profit-sharing dollars, if your plan allows them to be converted. Fully taxable, same treatment as pre-tax deferrals.
- After-tax (non-Roth) contributions. You already paid income tax on the contributions themselves, so only the earnings that grew on top of them are taxable at conversion. The contribution basis moves tax-free.
The after-tax bucket is the piece that makes the Mega Backdoor Roth work. The IRS caps total annual additions to a 401(k) well above the standard elective deferral limit, and the space between what you and your employer have contributed and that overall cap is what after-tax contributions can fill. Converting those dollars promptly, before meaningful earnings accumulate, is the whole point: convert fast enough and the conversion is nearly tax-free.2Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
Run the Conversion in NetBenefits
Whether you convert online or by phone depends on how your employer’s plan is configured within Fidelity’s system. Many plans support the transaction directly in NetBenefits; others still require a call.3Fidelity. Convert to a Roth IRA – Roth Conversion Rules and Deadlines
Online
Sign in to NetBenefits and open your 401(k) account. Look for a menu option labeled “Roth In-Plan Conversion,” “Withdrawals and Rollovers,” or something similar under “Change Investments / Transfers.” The exact label varies. When you find it, the tool will ask you to pick the source (pre-tax balance, after-tax balance, or both if the plan permits), enter a dollar amount, and confirm the destination is the designated Roth account inside the same plan. Read the confirmation screen before submitting.
The conversion typically processes by liquidating holdings in the source account to cash and reinvesting on the Roth side. Depending on plan rules, the reinvestment either mirrors your existing allocation or drops into a default money market fund, so check the Roth account afterward and reallocate if it landed in cash.
By Phone
If NetBenefits doesn’t show a conversion option, call Fidelity Workplace Investing at the number on your statement. Tell the representative you want to do an in-plan Roth conversion, specify the source and dollar amount, and confirm the destination. Save the confirmation number and note the date of the call.
Automate After-Tax Conversions If You Can
If your plan allows both after-tax contributions and in-plan Roth conversions, ask Fidelity whether automatic conversions are available. When enabled, each after-tax contribution sweeps into the designated Roth account on a daily or near-daily basis, so almost no earnings accumulate in the taxable window. You can usually turn this on in NetBenefits or over the phone. If automation isn’t offered, set a calendar reminder to convert manually after each pay cycle. A few weeks of drift can generate real taxable earnings.
Plan for the Tax Bill Before You Convert
A pre-tax conversion adds the entire converted amount to your ordinary income for the year. Convert $50,000 and you have $50,000 of additional taxable income, taxed at whatever marginal rate applies once that amount stacks on top of your other earnings.4Fidelity Investments. How Roth Conversions Affect Tax Deductions
Pay that tax from money outside the retirement account. Pulling cash from the 401(k) itself to cover the tax is a separate distribution, and if you’re under 59½ it can trigger the 10% early withdrawal penalty on top of the income tax you already owe.5Vanguard. IRA Roth Conversion
Because no tax is withheld at the time of an in-plan conversion (the money never leaves the plan), you need to make sure enough is paid in during the year to avoid an underpayment penalty. The safe harbor is at least 90% of your current-year tax or 100% of your prior-year tax through withholding and estimated payments, whichever is smaller.6Internal Revenue Service. Instructions for Form 2210 (2025) The cleanest fix is a new W-4 to your employer bumping up federal withholding for the rest of the year. If it’s too late for payroll to catch up, make a quarterly estimated payment through Form 1040-ES or IRS Direct Pay. Fall short and the penalty is calculated on Form 2210 with interest accruing quarterly.7Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
Watch for Ripple Effects on Your AGI
The taxable portion of a conversion raises your adjusted gross income, and several other tax items key off that number.
Medicare Premium Surcharges
Medicare bases Part B and Part D premiums on your modified AGI from two years prior. A big conversion in 2026 can raise your Medicare premiums starting in 2028. For 2026, the standard Part B premium is $202.90 per month, and once individual MAGI exceeds $109,000 ($218,000 joint), surcharges can more than triple that figure.8Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles If you’re near Medicare age or already enrolled, build the two-year lag into your timing.
Net Investment Income Tax
The conversion amount itself isn’t classified as net investment income, but it inflates MAGI. If that push takes you over $200,000 single or $250,000 joint, your existing dividends, capital gains, and rental income get hit with the additional 3.8% tax.9Office of the Law Revision Counsel. 26 U.S. Code 1411 – Imposition of Tax The thresholds aren’t indexed for inflation.
Credit Phase-Outs
Income-based credits fade as AGI climbs. The Lifetime Learning Credit, for example, phases out between $80,000 and $90,000 of MAGI for single filers and $160,000 to $180,000 joint.10Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 A conversion could erase a credit you were counting on.
State Income Tax
Most states with an income tax treat Roth conversion income as ordinary income the same way the federal government does. Rates run from zero in no-tax states to over 13% at the top bracket, so the combined federal-plus-state hit on a large pre-tax conversion in a high-tax state can be significant.
Know the Two Five-Year Clocks
Designated Roth accounts inside employer plans have two separate five-year periods, and mixing them up is a common trap.
Qualified Distribution Clock
To pull earnings out completely tax-free, your designated Roth account must have been open at least five tax years, counted from January 1 of the year you first made a designated Roth contribution to the plan. You also need to be at least 59½, disabled, or deceased. Meet both and the entire withdrawal, contributions and earnings, comes out tax-free.11Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts
Conversion Recapture Clock
Each in-plan conversion starts its own five-year period. Withdraw any portion of a converted amount within five tax years of that conversion while under 59½, and you may owe the 10% early withdrawal penalty on the taxable portion, even though you already paid income tax on it when you converted. The clock runs from January 1 of the conversion year through December 31 of the fifth year. Rolling the money to another designated Roth account or a Roth IRA doesn’t reset or erase it.11Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts
One detail catches people off guard. If you later roll your designated Roth 401(k) into a Roth IRA, the time the money spent in the 401(k) does not count toward the Roth IRA’s own five-year clock. An existing Roth IRA with contributions from a prior year keeps its earlier start date. But if the rollover creates your first Roth IRA, a fresh five-year clock begins.11Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts
The Conversion Is Permanent
Before 2018, you could undo a Roth conversion through recharacterization. The Tax Cuts and Jobs Act eliminated that option. Any conversion made on or after January 1, 2018 cannot be reversed, and this applies to conversions from any source, including 401(k) and 403(b) plans.12Internal Revenue Service. Retirement Plans FAQs Regarding IRAs Once the money is on the Roth side, the tax bill is locked in. Model the numbers before converting a large pre-tax balance.
No Lifetime RMDs From the Designated Roth Account
Starting with the 2024 tax year, designated Roth accounts inside employer plans are exempt from required minimum distributions during the account owner’s lifetime.13Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs Under SECURE Act 2.0, the old rule that forced Roth 401(k) withdrawals at 73 no longer applies. Converted dollars can stay in the plan’s Roth account and keep growing tax-free without a mandatory drawdown.
What Fidelity Sends You at Tax Time
After the conversion, Fidelity issues a Form 1099-R for the tax year the conversion happened in, generally by January 31 of the following year.14Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. The boxes to check:
- Box 1, Gross Distribution: the full dollar amount converted.
- Box 2a, Taxable Amount: equals Box 1 for a pre-tax conversion; reflects only the earnings for an after-tax conversion.
- Box 5, Employee Contributions: the after-tax basis that converted tax-free.
- Box 7, Distribution Code: Code G, indicating a direct rollover to a designated Roth account inside the same plan.15Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
Report the amount in Box 2a as ordinary income on your Form 1040. For a purely in-plan 401(k) conversion, Form 8606 is generally not required because the 1099-R already carries the information your return needs; Form 8606 comes in only when the transaction involves a traditional IRA with nondeductible contributions, which is a different move.16Internal Revenue Service. About Form 8606, Nondeductible IRAs Keep the 1099-R and Fidelity’s conversion confirmation in your permanent tax records so you can track your Roth basis over time.
A Warning on Employer Stock
If your 401(k) holds shares of your employer’s stock with significant appreciation, think twice before including those shares in a conversion. Employer stock that qualifies for net unrealized appreciation (NUA) treatment can be distributed in kind at separation from service and taxed at long-term capital gains rates on the appreciation, which is well below ordinary income rates. Converting that stock into the designated Roth account eliminates NUA, because the shares must be distributed as actual stock (not converted inside the plan) to qualify. NUA also requires distributing your entire vested balance in one tax year, and earlier distributions can disqualify you.17Fidelity. Net Unrealized Appreciation (NUA) – Make the Most of Company Stock Run the NUA analysis before converting any portion of an account with a meaningful employer stock position.