These are just direct Roth conversions that did not go through a TIRA first. They are taxable just like any other Roth IRA distribution under the ordering rules. In other words, if this were your only Roth contribution, you could distribute the conversion without tax, but the 5 year holding rule would apply to penalty avoidance. Therefore, if you were not 59.5 and had not held the conversion 5 years, a 10% penalty would apply to only the taxable portion of your conversion. In addition, if you elected the two year deferral for a 2010 conversion, distribution of part of the conversion prior to 2012 would accelerate the tax bill (for pre tax amounts) back into the year of distribution.

All this said, if you do a direct rollover of a 401k into a TIRA and a Roth IRA, it appears from a recent IRS ruling that the pro rate rules apply, ie part of each direct rollover would be pre tax and post tax. This makes it impossible to segregate the after tax amounts and direct all of them to a Roth IRA in a tax free conversion. HOWEVER, this CAN be done if you wish to do it by indirect rollover, ie all funds paid to you, and you have the money to replace the 20% withholding on the taxable portion. You can then first rollover the pre tax amount to a TIRA leaving only the after tax amount for the Roth IRA. The reason you cannot do this with a direct rollover is that a special rule applies to participant rollovers, ie rollover that go through the participant (employee).

And yes, this introduces some unwelcome complexity, that even the IRS has been stumbling to make clear.

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