Roth 401K rollover to Roth IRA
If we roll out the a Roth 401k before someone is 59 1/2 to a Roth IRA, are the contributions still allowed to be pulled out penalty and tax free as long as the Roth 401k had contributions for at least 5 years? or Is there another 5 year waiting period after the rollover is complete?
Permalink Submitted by Alan - IRA critic on Tue, 2025-03-04 10:02
The amount of Roth 401k contributions (shown in Box 5 of the 1099R) is treated as regular Roth IRA contributions and therefore can be withdrawn from the Roth IRA anytime without tax or penalty.
The gains in the Roth 401k are treated as Roth IRA gains and only become tax free when the Roth IRA is itself qualified (59.5 and 5 years).
If the Roth 401k included in plan Roth rollovers, there are more complex considerations regarding the 5 year holding requirement for the taxable portion.