Author Topic: Roth 401(k) withdrawals - are the gains tax free?  (Read 471 times)

GOFU

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Roth 401(k) withdrawals - are the gains tax free?
« on: February 02, 2018, 07:13:10 PM »
Roth 401k.

Qualified withdrawals are not subject to income tax. Does that apply to gains too?

Example: I put $5k of post-tax earnings in a Roth 401k, and have investment earnings inside the account of $10k, so the account is worth $15k.

I make a qualified withdrawal of $12k.

Are the $7k of gains that I withdrew subject to income tax? 
« Last Edit: February 02, 2018, 07:17:02 PM by GOFU »

VoteCthulu

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Re: Roth 401(k) withdrawals - are the gains tax free?
« Reply #1 on: February 02, 2018, 08:04:04 PM »
Yes.

Edit: No if you mean waiting until 59.5 when you can pull it out tax free.
« Last Edit: February 02, 2018, 10:06:01 PM by VoteCthulu »

MDM

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Re: Roth 401(k) withdrawals - are the gains tax free?
« Reply #2 on: February 02, 2018, 08:11:28 PM »
That is somewhat of a trick question.  If by "qualified withdrawal" you mean "qualified distribution" then the answer is "no" because
Quote
a qualified distribution from a designated Roth account is not included in your gross income.

If "qualified withdrawal" means something else, then it depends on what it means.

GOFU

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Re: Roth 401(k) withdrawals - are the gains tax free?
« Reply #3 on: February 02, 2018, 08:15:39 PM »
That is somewhat of a trick question.  If by "qualified withdrawal" you mean "qualified distribution" then the answer is "no" because
Quote
a qualified distribution from a designated Roth account is not included in your gross income.

If "qualified withdrawal" means something else, then it depends on what it means.

OK. Learning my nomenclature as well. Thank you for that.

So your answer is no, the gains are not subject to income tax. @VoteCthulu says yes. Seems we have a conflict.

MDM

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Re: Roth 401(k) withdrawals - are the gains tax free?
« Reply #4 on: February 02, 2018, 08:17:09 PM »
Follow the "qualified distribution" link....

branman42

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Re: Roth 401(k) withdrawals - are the gains tax free?
« Reply #5 on: February 02, 2018, 09:54:14 PM »
MDM is the correct one.

VoteCthulu

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Re: Roth 401(k) withdrawals - are the gains tax free?
« Reply #6 on: February 02, 2018, 10:03:52 PM »
I thought he was talking about withdrawing right away, you can withdraw you contributions at any time without paying tax, but you have to wait until 59.5 or the gains are taxable. MDM's link has everything you need.

GOFU

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Re: Roth 401(k) withdrawals - are the gains tax free?
« Reply #7 on: February 03, 2018, 09:54:22 AM »

Yes, I was not clear in my original question. I am talking about a qualified distribution after age 59.5.

Alles klar!!!

Thank you for the responses and the resource.