Roth 401k to Roth IRA Rollover with Employer Matching

[JTax6]

Hello, I am 35 years old and am trying to figure out my contribution basis for my Roth IRA which includes funds rolled over from both a Roth 401k and a regular 401k with employee contributions. 

In 2021, I stopped working at a company and had accumulated the following accounts: 

Roth 401k (post-tax): $10k personal contributions, $3k earnings and no employer match

Traditional 401k (pretax): $5k employer matching contributions, $2k earnings

Upon leaving the company in 2021, I rolled over the full $20k from both accounts to my Roth IRA, which was already opened and had been funded separately since 2017, and I paid income taxes on the $7k from the traditional 401k. Here are my questions: 

1. How much of the $20k that I rolled into my Roth IRA can I withdraw today without paying the 10% penalty?

2. Does that amount change/increase in 2026 (5 years after the rollover), or is the 5-year rule irrelevant since the Roth IRA was first contributed to in 2017 (7 years ago)?

Thank you in advance. 

[dmertz · Accepted solution]

1.  $10k.  The $10k of contribution basis in the Roth 401(k) account became contribution basis in your Roth IRAs and the $3k of earnings on that became earnings in your Roth IRAs.

2.  Yes.  The $7k that  you rolled over from the traditional 401(k) account to the Roth IRA became Roth IRA conversion basis in 2021.  As of January 1, 2026 that $7k will have completed the 5-year conversion clock, allowing that $7k to be distributed without penalty after the $10k of contribution basis has been distributed.

5-year conversion clocks are separate from the 5-year qualification clock.  To be a qualified distribution from your Roth IRAs where the earnings are not longer subject to taxation, the 5-year qualification clock must be completed (which will have happened as of January 1, 2026) as well as you being age 59½ or over or disabled.