Alan,
I have copied your my previous question and your answer below the *****. Two follow-up questions and bit of additional info please:

I also have a $30K loan that I would love to pay off. From your answer below, it appears that I can roll the entire $40K over to a Roth IRA, and then immediately withdraw $30K because the 5-year clock doesn’t apply to my $30K of contributions into the Roth 401k. Question 1 — is that correct?

Question 2:
Can I do the following rollover transaction:
$190K of pre-tax money and growth of pre-tax money from 401k roll to Traditional IRA
$10K of growth on Roth 401k contributions roll to Roth IRA
$30K check distribution payable to me.

In this case, would the $10K of growth on the Roth 401k contributions still be eligible to roll to a Roth IRA????? I thought the plan administrator said in this type of a distribution, the growth would have to go to a Traditional IRA, but again I think either he was misinformed or I misunderstood.

Thanks again.

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Hi,
I am considering rolling over a 401k from a previous employer to my Traditional IRA and Roth IRA. The 401k is worth $230,000. $190,000 is pre-tax contributions and growth on the pre-tax contributions. I also have contributed $30,000 to the Roth part of the 401k, and that Roth part is now worth $40,000.

I was of the impression that I could roll $190K to my Traditional IRA and $40K to my Roth IRA. However the administrator said I could only roll $30K to my Roth IRA and the $10K growth on my Roth IRA would have to be rolled into my Traditional IRA along with the other $190K. I don’t want to do this because wouldn’t the $10K of growth be taxable in the future when it is distributed.

Perhaps I misunderstood things … but can I roll the entire $40K Roth 401k balance into my Roth IRA? I am 50 years old.
Part 2: would the answer be different if I were over 59 -1/2?

Thank you!

Permalink Submitted by Alan-iracritic@… on Fri, 2018-09-21 17:01

Either you misunderstood, or the administrator is misinformed. None of the money in the Roth 401k can be rolled into a pre tax retirement account. It must be either rolled to your Roth IRA or distributed to you. The plan MUST allow you to do a direct rollover of the Roth balance into your Roth IRA. Once in your Roth IRA, the amount of your contributions (shown in Box 5 of your direct rollover 1099R) is treated as if it was a regular Roth IRA contribution, available without tax or penalty anytime. If you were 59.5, the rollover requirement would be the same, but if your Roth 401k was qualified (5 years and 59.5), the entire 40k would be treated as a regular Roth IRA contribution. Of course, the plan must also offer a direct rollover of the pre tax 401k to your TIRA (or to your Roth IRA if you wanted to convert, but would owe taxes if the pre tax 401k was rolled to a Roth IRA.