A 401(k) in-plan Roth conversion (also called an 'in-plan Roth rollover') allows PG&E employees to transfer the non-Roth portion of your 401(k) account into a designated Roth account within the same plan. The amount that PG&E employees convert is subject to federal income tax in the year of the conversion (except for any nontaxable basis you have in the amount transferred), but qualified distributions from the Roth account in the future are entirely income tax-free. The 10% early distribution penalty doesn't apply to amounts you convert (but that tax may be reclaimed by the IRS if you take a non-qualified distribution from your Roth account within five years of the conversion).

What part of my account can I convert? 
Assuming your PG&E 401(k) allows in-plan conversions (plans aren't required to), you can convert any vested part of your 401(k) plan account into a designated Roth account regardless of whether you're otherwise eligible for a plan distribution.


Keep in mind that if you're entitled to an eligible rollover distribution, you can always roll those dollars into a Roth IRA instead of using an in-plan conversion.

What else do I need to know?

If you have the choice of an in-plan conversion or a rollover to a Roth IRA, which should you choose? There are a number of factors to consider:

• In general, the investments available in an employer 401(k) plan are fairly limited, while virtually and type of investment is available in an IRA (on the other hand, your 401(k) plan may offer investments that you can't replicate in an IRA, or that aren't available at similar cost).
• An IRA may give you more flexibility with distributions. Your distribution options in a 401(k) plan depend on the terms of that particular plan, and your options may be limited.
• Finally, 401(k) plans typically enjoy more protection from creditors under federal law than do IRAs (consult a professional if creditor protection is important to you).

Caution: When evaluating whether to initiate a rollover from an employer plan to an IRA, always be sure to (1) ask about possible surrender charges that may be imposed by your employer plan, or new surrender charges that your IRA may impose, (2) compare investment fees and expenses charged by your IRA (and investment funds) with those charged by your employer plan (if any), and (3) understand any accumulated rights or guarantees that you may be giving up by transferring funds out of your employer plan.

If you're weighing 401(k) investing, PG&E's benefits structure is the piece most employees underestimate. The retirement plan details that seem like fine print today become the numbers that define your income later.

What PG&E provides on the retirement side matters: The company offers competitive retirement benefits including employer-sponsored savings plans designed to help employees build long-term financial security alongside Social Security benefits. Your health benefits matter too. Decisions about HSA contributions, health plan tiers, and whether dental and vision coverage carries into retirement all affect how much income you'll need and how your 401(k) investing strategy should work.

For PG&E employees, the next step is straightforward: review your plan documents, confirm your current elections, and make sure your approach to 401(k) investing accounts for the full picture of what your employer provides.