Roth 401k Rollover to “personal” Roth IRA
My client has a Roth 401k that has been in place for only 2 years. He is 65 and retiring.
If he rolls over the 401k Roth money into his own existing Roth IRA does he still get to take money out of that based on the date he started his own Roth IRA? (i.e. no taxes or penalties 5 years after he opened the account)
Anything else we need to watch?
Permalink Submitted by Alan - IRA critic on Fri, 2017-08-11 16:56
If client made his first Roth IRA contribution prior to 2013, then his Roth IRA is fully qualified and the Roth 401k money will also be qualified as soon as it is rolled into the Roth IRA. Otherwise, if his Roth IRA is not yet qualified, then only the client’s contributions to the Roth 401k as reported in Box 5 of the 1099R are treated as regular Roth IRA contributions and can be distributed tax and penalty free. In other words, if his Roth IRA is qualified, it is very simple, but if not he has some accounting to do if he takes a Roth IRA distribution before his Roth IRA has been held 5 years.