Left employer in 2020. At that time I rolled my Traditional 401K amount into a Traditional IRA and my Roth 401K amount into a Existing Roth IRA. I have had the Existing Roth IRA for more than 5 years.
Is the full amount that I rolled from the Roth 401K considered a contribution to the Existing Roth IRA or only the amount that I contributed to the Roth 401K considered a contribution. Then employer match and earnings from the Designated Roth 401K now considered earnings in the existing Roth IRA. I stumbled upon this description and just looking for clarification.
Q-3. For purposes of the ordering rules on distributions from Roth IRAs, what portion of a distribution from a rollover contribution from a designated Roth account is treated as contributions?
A-3. (a) Under section 408A(d)(4), distributions from Roth IRAs are deemed to consist first of regular contributions, then of conversion contributions, and finally, of earnings. For purposes of section 408A(d)(4), the amount of a rollover contribution that is treated as a regular contribution is the portion of the distribution that is treated as investment in the contract under A-6 of § 1.402A-1, and the remainder of the rollover contribution is treated as earnings. Thus, the entire amount of any qualified distribution from a designated Roth account that is rolled over into a Roth IRA is treated as a regular contribution to the Roth IRA. Accordingly, a subsequent distribution from the Roth IRA in the amount of that rollover contribution is not includible in gross income under the rules of A-8 of § 1.408A-6.
