taking contributions from Roth 401K
I understand that contributions can be removed from Roth IRA accounts at anytime without penalty. Does the same apply to contributions for Roth 401k plans?
I understand that contributions can be removed from Roth IRA accounts at anytime without penalty. Does the same apply to contributions for Roth 401k plans?
Permalink Submitted by Alan - IRA critic on Fri, 2015-03-20 18:22
No. A Roth 401k deferral cannot be withdrawn before 59.5 unless the employee separates from service. If and when a distribution can be made, it comes out pro rated between earnings and contributions. So if a plan balance is 20% higher than the contributions made, each distribution is 20% earnings and 80% contributions. The earnings portion is taxable and subject to penalty assuming the Roth 401k is not yet qualified. Once a Roth 401k is rolled over to a Roth IRA, then the Roth IRA ordering rules take over.