@hassanef55 wrote:
Yes, it is a direct transfer. I figured a Roth contribution to either Roth accounts means you're still able to withdraw what you contributed without tax or penalty.
OK, I answered first on my phone and didn't understand the actual point of the question.
When you withdraw Roth IRA funds, you are required to withdraw contributions first, then rollovers and conversions, then earnings last. This is per law, you can't change it if you want to. Withdrawals of a rollover amount are not subject to income tax (since the source was after-tax money), but withdrawals of a rollover are subject to a 10% tax for early withdrawal if you are under age 59-1/2 and if the rollover was less than 5 tax years ago. The IRS does not count the contribution part of the rollover separate from the earnings part of the rollover, it is all one rollover and subject to the same rules. You will pay a 10% penalty if you withdraw any part of the rollover in the first 5 years after the rollover, if you are under age 59-1/2. If you make the rollover any time in 2022, the fifth year is 2026 (counting 2022 as the first year) so any withdrawal made during 2027 or later would be exempt from the 10% penalty.
Your Roth IRA has another 5 year rule: any withdrawal of earnings is subject to income tax and a 10% penalty if the account has been open less than 5 years and you are under age 59-1/2, and such a withdrawal is subject to income tax (but not the 10% penalty) even if you are over age 59-1/2. This 5 year rule is satisfied when you open any Roth IRA and have it for 5 years, even if the specific account is less than 5 years old. So if this is your first Roth IRA, you will pay a 10% penalty if you withdraw any amount of the rollover before 2027, and you will pay income tax on any part of the earnings (that are earned after the rollover) that you withdraw before 2027, even if you are over age 59-1/2.
So the simple answer is no, you can't withdraw the money without taxes and penalty. You have to look at your age and 2 different 5 year rules. If you leave the money in the 401(k), you can withdraw the contributions without penalty, and you pay income tax and a 10% penalty if you withdraw the earnings and you are under age 55 or age 59-1/2, depending on when you separate from service. (Also note, you usually can't withdraw or rollover any funds from a 401(k) as long as you are still employed with the plan sponsor.)
