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Quick Question on Roth 401k to Roth IRA Rollover
Posted on 5/6/14 at 1:41 pm
Posted on 5/6/14 at 1:41 pm
If my understanding is correct, distributions from a ROTH IRA are treated in this order:
1) Contributions
2) Conversions (IRA to ROTH for example)
3) Earnings
My understanding is that contributions can be withdrawn penalty free and conversions can be withdrawn penalty free after five years. Earnings would incur a penalty if withdrawn before 59.5 years of age. A traditional IRA to ROTH conversion would fall under conversions. What would a ROTH 401k to ROTH IRA rollover be classified under? Contributions or conversions?
1) Contributions
2) Conversions (IRA to ROTH for example)
3) Earnings
My understanding is that contributions can be withdrawn penalty free and conversions can be withdrawn penalty free after five years. Earnings would incur a penalty if withdrawn before 59.5 years of age. A traditional IRA to ROTH conversion would fall under conversions. What would a ROTH 401k to ROTH IRA rollover be classified under? Contributions or conversions?
4
Posted on 5/6/14 at 3:33 pm to Anfield Road
I think I need the same answers, but thats a lot of questions.
Posted on 5/6/14 at 7:46 pm to Anfield Road
It's just a contribution.
To be technical: a rollover contribution.
To be technical: a rollover contribution.
This post was edited on 5/6/14 at 7:47 pm
Posted on 5/6/14 at 7:55 pm to Anfield Road
quote:
What would a ROTH 401k to ROTH IRA rollover be classified under? Contributions or conversions?
I am not an expert but I would be surprised if converting a Roth 401K to a Roth IRA properly for example, losing your job or changing employers, would be a taxable event.
Posted on 5/6/14 at 8:16 pm to PlanoPrivateer
quote:
I am not an expert but I would be surprised if converting a Roth 401K to a Roth IRA properly for example, losing your job or changing employers, would be a taxable event.
It wouldn't be.
Posted on 5/6/14 at 8:57 pm to Anfield Road
It wouldn't be, but that 5 year rule would still come into play. So open a Roth IRA and fund it with a few dollars to get the clock ticking. Then when you rollover your Roth 401k you aren't caught by the 5 year rule.
Posted on 5/7/14 at 12:22 am to Anfield Road
Consult a tax specialist, but here is what FINRA says:
quote:
Rolling your Roth 401(k) to a Roth IRA. You can roll your Roth 401(k) assets into a new or existing Roth IRA with a custodian of your choice. You complete the forms required by the IRA provider and your 401(k) plan administrator, and the money is moved directly either electronically or by check. No taxes are due when the money is moved and any new earnings accumulate tax deferred. Earnings are eligible for tax-free withdrawal once the IRA has been open at least five years and you are at least 59½.
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