ROTH Withdrawals
I have a question. A 50 yr old client has a ROTH IRA that was completely rolled over from a ROTH 401k in 2020. He had the Roth 401k for more than 5 years. He has 90k in the Roth IRA now. The total contributions were around 50k. Can he take 20k of contributions out without penalty or taxation? I’m thinking yes, since it is now an IRA. But not sure since the IRA itself is only 1 and 1/2 year old. However, the contributions to the former 401k were started well more than 5 years ago. And there have been NO further ROTH contributions made since it was rolled over.
Thanks,
Dana
Permalink Submitted by Alan - IRA critic on Thu, 2021-12-16 22:56
Yes, up to 50,000 can be distributed from the Roth IRA without tax or penalty. Client will have a 2020 1099R from the Roth 401k plan reporting the direct rollover. The amount in Box 5 of that 1099R should be treated in the Roth IRA as regular Roth IRA contribution basis. Such basis can be distributed from the Roth IRA anytime without tax or penalty, but that Roth IRA distribution must be reported on Form 8606 with the correct amount on line 22.