"If I understand where we are, this means she could (and probably should) transfer the Roth from the first company to a regular after tax saving account, because there is no benefit in leaving that money in the Roth and she can do this because she no longer works at the first company."
Only with respect to the excess (Roth elective contribution for 2023) and attributable income. Anything else that might be in the Roth 401(k) at the first company can remain or be rolled over to another Roth account. Because the plan will issue a Form 1099-R showing the distribution as a regular distribution of a mix of nontaxable basis and taxable gains, an explanation would need to be included with the tax return for the year of this distribution showing why the entire amount is taxable, probably by submitting a substitute Form 1099-R (Form 4852). One thing I'm not sure about is whether this amount is subject to an early distribution penalty. If so, because the entire amount is taxable, it would seem that the entire amount would be subject to the 10% early-distribution penalty if distributed before age 59½. However, given that such a distribution from the traditional 401(k) account would be subject to this penalty, I believe that the same is true for such a distribution from the designated Roth account.
