dmertz
Level 15

Retirement tax questions

Distributions from a Roth 401(k) are not subject to Roth IRA ordering rules.  Nonqualified distributions from Roth 401(k)s as in this case are always a proportionate combination of nontaxable contribution basis and taxable earnings.  A nonqualified distribution from a Roth 401(k) can only be entirely nontaxable if the Roth 401(k) consists of only contributions and no earnings, which can only happen if the Roth 401(k) has not gained in value due to bad investment performance.

 

IRS Pub 590-B has nothing to do with Roth 401(k)s.  It only applies to IRAs.