5 year rule for Roth

Does the 5 years reset if you move a Roth 401k to a Rollover Roth IRA (Brokerage)?



Yes, but if the Roth 401k is qualified (5 years and 59.5), the entire amount rolled over to the Roth IRA is treated as Roth IRA basis, so available to withdraw anytime tax and penalty free. If Roth 401k is not qualified, then only the Roth 401k basis becomes Roth IRA basis.

How would I know if the Roth 401K was qualified?

Yes, but if the Roth 401k is qualified (5 years and 59.5), the entire amount rolled over is treated as regular Roth IRA contribution basis, available to withdraw any time without tax or penalty. If the Roth 401k is not qualified, only the Roth 401k basis becomes Roth IRA basis. The Roth IRA itself must be qualified for any gains generated in the Roth IRA to be tax free.

If you first contributed to the Roth 401k prior to 2021, and you are over 59.5 or disabled, your Roth 401k is qualified. If not qualified, it will be if you meet these requirements before it is rolled over.

If it is not qualified, the amount added to your Roth IRA basis will show in Box 5 of the 1099R you will receive reporting the direct rollover.

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