Thanks for your reply and it mostly makes sense. What I need to clarify is how the contribution amount is determined. This is my first Roth IRA. I retired in 2024 and had very little earnings for the year and small 401K contribution. My 1st Roth 401K contribution year was 2010 and 1st year of withdrawal without penalty was 2015. My last contribution made was in 2024 as little as it was. Fidelity (my 401K broker) tells me when the rollover took place the rolled over amount would include contribution + earnings (all Roth $$). Using the $100K example, Fidelity is telling me my contributions are $49,000 and earnings are $51,000 and that the Pro-Rata rule would come into play if I take an unqualified distribution (less than 5 years) from Roth IRA. I am not mixing source funding, all is 100% Roth.
From what you were saying, its sounds like the full amount of rollover ($100K) would be treated as 100% contribution and there would be $0 earnings. If that is the case, then growth in the Roth IRA would be earnings ($50K if market value of the Roth IRA is $150K at the time of distribution). Is that correct?
If so, what do you make of Fidelity telling me the rollover would come across as both contribution & earnings into the Roth IRA? And what Fidelity says about the Pro-Rata rule?
Thank you.
