Author Topic: roth 401k-->roth ira tax ?  (Read 344 times)

privatefarmer

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roth 401k-->roth ira tax ?
« on: February 11, 2018, 07:36:53 AM »
If I roll over 100k from a roth 401k --> roth IRA, and 20k of that is earnings (80k is my contributions), after it has been converted to a roth IRA is it ALL considered "contributions"? If I wanted to withdrawal the 100k from the roth IRA before age 59 1/2, 5 years after the conversion, would I be able to tax/penalty free? Thanks!

privatefarmer

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roth 401k --> roth IRA tax question
« Reply #1 on: February 11, 2018, 07:36:04 AM »
sorry if this has already been asked, I could not find the answer...

If I roll over 100k from a roth 401k --> roth IRA, and 20k of that is earnings (80k is my contributions), after it has been converted to a roth IRA is it ALL considered "contributions"? If I wanted to withdrawal the 100k from the roth IRA before age 59 1/2, 5 years after the conversion, would I be able to tax/penalty free? Thanks!

MDM

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Re: roth 401k --> roth IRA tax question
« Reply #2 on: February 11, 2018, 12:28:09 PM »
If I roll over 100k from a roth 401k --> roth IRA, and 20k of that is earnings (80k is my contributions), after it has been converted to a roth IRA is it ALL considered "contributions"? If I wanted to withdrawal the 100k from the roth IRA before age 59 1/2, 5 years after the conversion, would I be able to tax/penalty free? Thanks!
No and no.  It would be nice if the IRS would allow a Roth to Roth conversion to transform earnings into contributions, but they don't.

Also, when a designated Roth account from an employer retirement plan is rolled into a Roth IRA, the years in the Roth employer plan do not count towards the Roth IRA.

seattlecyclone

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Re: roth 401k-->roth ira tax ?
« Reply #3 on: February 11, 2018, 01:49:23 PM »
Nope, only the part that counted as contributions to the Roth 401(k) would then count as contributions in the Roth IRA. Any growth that happened inside the Roth 401(k) would still count as growth once it hits the Roth IRA.

But those actual contributions can be removed from the Roth IRA the day after you do the rollover if you want. No need to wait five years.

seattlecyclone

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Re: roth 401k --> roth IRA tax question
« Reply #4 on: February 11, 2018, 01:53:26 PM »
Also, when a designated Roth account from an employer retirement plan is rolled into a Roth IRA, the years in the Roth employer plan do not count towards the Roth IRA.

This is true, but it doesn't affect the ability to withdraw the contributions tax-free. This can be done at any time. To withdraw the earnings tax-free, you need to be old enough and also have the Roth IRA open for five years.