Rollover Roth 403(b) to Roth IRA
I have a client who established a Roth IRA 3 years ago. She will be quitting her job this year. She has a Roth 403(b) where she works and wants to roll this over to her Roth IRA. Does she only need to wait two more years to meet the 5-year requirement, or does she need to open a separate Roth IRA and start the time period all over again?
Permalink Submitted by Alan - IRA critic on Wed, 2013-01-30 21:36
She must wait two more years for her Roth IRA to become quaified, assuming she also will be 59.5. The Roth 403b will issue a 1099R for the rollover and a box will indicate her total Roth deferrals. Until her Roth IRA becomes qualified, the amount in the 1099R box will be treated as additional regular Roth IRA contributions eligible for tax free distribution. If her Roth 403b balance included non qualified earnings (less than 5 years in the Roth 403b or under 59.5) these earnings will be treated as if they were Roth IRA earnings. Once the Roth IRA becomes qualified, the entire balance will be tax and penalty free.