Roth 401(K) Rollovers and the Once-Per-Year Rollover Rule: Today’s Slott Report Mailbag

Thursday, September 05, 2024

Sarah Brenner, JD
Director of Retirement Education

Question:

Can I roll over a Roth 401(k) to an existing Roth IRA or does it need to be in its own separate account? When does the 5-year holding period begin for the Roth 401K rollover?

Thank you,

Elisabeth

Answer:

Hi Elisabeth,

A Roth 401(k) can be rolled into an existing Roth IRA. The funds do not have to be kept separate. The 5-year holding period for tax-free distributions of earnings will be the existing Roth IRA’s 5-year holding period. This 5-year holding period does not restart with the rollover from the plan.

Question:

Dear IRA Help:

I have already done one 60-day rollover from a qualified plan to my IRA within the last 12 months, and I would like to do another 60 day-rollover from the same qualified plan to the same IRA. My IRA custodian is claiming I am limited to one 60-day rollover per year from a qualified plan to an IRA.

Can I please have a clarification?

Sincerely,

Victor

Answer:

Hi Victor,

Good news! The once-per-year rollover rule to which you are referring does not apply to your situation. This rule limits 60-day rollovers between IRAs. You may only roll over one distribution from all of your IRAs within a 365-day period. However, this rule does not apply to rollovers from plans to IRAs. There is no limit on the number of plan-to-IRA rollovers that can be done within a 365-day period.

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