let's assume I do a direct rollover of $12,000 from Roth 401(k) to Roth IRA, and $9,600 is considered contributions and $2,400 is considered earnings. I'm under 59½, and my 401(k)—but not my IRA—is less than 5 years old. Is any portion of this transaction taxable?
None of it is taxable. The earnings in the Roth 401(k) simply become earnings in the Roth IRA.
Note that the establishment date of the Roth 401(k) does not carry over to the Roth IRA. The 5-year period for qualified distributions from a Roth IRA begins at the beginning of the year for which the first contribution is made to the Roth IRA. If this rollover establishes the individual's first Roth IRA, the 5-year period for qualified distributions from the Roth IRA begins on January 1 of the year in which the rollover is received by the Roth IRA.
