Roth 5yr rule with 410k Roth
Client has Roth with our firm which was started over 5yrs ago.
She is now starting a 401k Roth with her employer.
Question:
- The 5yrs are already completed with the Roth at our firm, correct?
- or does she have another 5yr time frame for the employer Roth 401K
Thank you,
Doulgas
Permalink Submitted by Alan - IRA critic on Tue, 2025-03-25 15:10
Each plan has a 5 year holding period. The Roth 401k balance will not be qualified until age 59.5 and 5 years holding period. But if the Roth 401k is rolled into a Roth IRA that is already qualified, the Roth 401k balance will also be qualified.
Permalink Submitted by Douglas Bauerband on Mon, 2025-03-31 11:31
Does the 5yr holding period also include managed account Roth’s and mutual fund Roth IRA’s?
Example: someone has a Roth IRA with a bank for over 5yrs and wants to keep it, but opens a new Roth IRA with a mutual fund company or managed account…they still have a new 5yr holding period?
What about a Roth IRA that was opened for over 5yrs, then they used for an emergency or some other reason and open a new Roth IRA…they have to wait another 5yrs on the new Roth IRA?
Thank you for the clarification.
Douglas