ROTH 401k under 5 years rollover to ROTH IRA

[bb127]

I left the employer in Dec/2022 and I first contributed to this employer’s ROTH 401k in Mar/2022. I am under 59 1/2 age, and would like to rollover to ROTH IRA in 2023. Since this ROTH 401K account is held under 5 years, will I be charged 10% penalty when I rollover to ROTH IRA? if there will be 10% penalty, will the penalty charge on the earnings only or total amount including contribution? Thank you for the help!

[Anonymous_]

@dmertz 

[Opus 17]

A rollover is not a withdrawal. There is no penalty in this situation. However, because an IRA is controlled by different tax laws than a 401(k), your Roth IRA will start a new five-year clock.

[dmertz]

Adding to what Opus 17 said, your Roth 401(k) contribution basis becomes contribution basis in your Roth IRAs and any earnings in the Roth 401(k) become earnings in the Roth IRA.

[bb127]

Thank you so much for the reply!

[bb127]

Thank you so much for the info!