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Roth 401(k) rollover to Roth IRA question
Old 03-02-2024, 02:26 PM   #1
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Roth 401(k) rollover to Roth IRA question

I have a Roth 401(k) at an old employer. If I roll it over to Roth IRA, do I have to wait 5 years to draw like I would with a traditional Roth conversion rollover?

*By way of background, I am 54 so this is not a problem today as I have 5+ years, but if the 5 year rule DOES apply, then I would want to do it now so it is not an issue after I turn 59.5. If the 5 year rule DOES NOT apply, then I have no problem leaving it and my traditional 401(k) at my former employer for the extra ERISA protection and the plan fund options are fine.

**I have an existing Roth IRA that is over 5 years old. I wonder if I can role the Roth 401(k) into that account, and whether that matters?

5 year rule: https://www.investopedia.com/ask/ans...periodroth.asp
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Old 03-02-2024, 02:48 PM   #2
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The 5 year rule applies to earnings but not contributions that are rolled from an employer plan. However, from the IRS' point of view, they aggregate all your Roth IRA accounts and treat them as one, so if you have any Roth IRA that's over 5 years old, you meet the 5 year test.

It does not matter which Roth IRA account you roll into. I personally would put it in the existing one, but that's just because I prefer to have fewer accounts to keep track of.
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Old 03-02-2024, 02:51 PM   #3
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Quote:
Originally Posted by cathy63 View Post
The 5 year rule applies to earnings but not contributions that are rolled from an employer plan. However, from the IRS' point of view, they aggregate all your Roth IRA accounts and treat them as one, so if you have any Roth IRA that's over 5 years old, you meet the 5 year test.

It does not matter which Roth IRA account you roll into. I personally would put it in the existing one, but that's just because I prefer to have fewer accounts to keep track of.
Thanks!!
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Old 03-02-2024, 03:04 PM   #4
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Seems I should be good then. Plus, since the conventional wisdom is to draw from: (1) Taxable accounts first; (2) Traditional tax deferred accounts like IRAs, SepIRAs and 401(k)s second; then (3) Non-taxable accounts like Roth IRAs and Roth 401(k)s third, I may have some time.

That said, I might want to get the Roth 401(k) rolled-over into a Roth IRA to avoid RMD rules, which appear to apply to Roth 401(k)s, but not Roth IRAs.
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Old 03-02-2024, 03:35 PM   #5
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Quoting the IRS FAQ:
Roth IRAs do not require withdrawals until after the death of the owner. Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts. You must still take RMDs from designated Roth accounts for 2023, including those with a required beginning date of April 1, 2024.
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Old 03-02-2024, 04:03 PM   #6
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Originally Posted by Al18 View Post
Quoting the IRS FAQ:
Roth IRAs do not require withdrawals until after the death of the owner. Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts. You must still take RMDs from designated Roth accounts for 2023, including those with a required beginning date of April 1, 2024.
That is great news!! 54 now, so I am good. No rmds for my Roth 401k.
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Old 03-05-2024, 07:57 AM   #7
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Originally Posted by Wetfly93 View Post
When I was your age I could not do Roth conversions, my thinking was it would bring my income up and I will have to pay more in taxes.
This is a Roth 401k to Roth IRA so no taxes are due.
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Old 03-05-2024, 10:35 AM   #8
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Quote:
Originally Posted by CSdot View Post
Seems I should be good then. Plus, since the conventional wisdom is to draw from: (1) Taxable accounts first; (2) Traditional tax deferred accounts like IRAs, SepIRAs and 401(k)s second; then (3) Non-taxable accounts like Roth IRAs and Roth 401(k)s third, I may have some time.

<snip>
You might want to draw from your accounts proportionately to smooth out taxes over your lifetime. See article below, but Kitces.com has a better write-up I can't find right now.
https://www.fidelity.com/viewpoints/...%20more%20time.

Or you may want to do tIRA to Roth conversions while you are drawing down your taxable accounts. (Still smoothing out your tax liabilities over time.) Look up tax bomb on here to get more ideas.
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Old 03-05-2024, 10:51 AM   #9
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Here is the Kitces article: https://www.kitces.com/blog/tax-effi...pending-needs/
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Old 03-05-2024, 02:28 PM   #10
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Thanks for the head's up on the tax issue. Looks like I have some reading to do.
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