dmertz
Level 15

Retirement tax questions

Unlike distributions from a Roth 401(k) that come proportionately from contributions and earnings, distributions form a Roth IRA come first from contributions.  Once rolled over to a Roth IRA, distributions from the Roth IRA are governed by Roth IRA distribution ordering rules, so your $30,000 of contributions rolled over from the Roth 401(k) will come out of the Roth IRA first, tax and penalty free.

There is no 5-year window involved with this unless you will reach age 59½ by 5 years from the beginning of the year for which you first made a contribution to a Roth IRA, in which case any distribution from a Roth IRA that you own would be tax and penalty free.  You may be thinking about the 5-year rule for Roth conversions (a different 5-year rule), but a rollover from a Roth 401(k) is not a Roth conversion.

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