Roth 457 Direct Rollover to Roth IRA - Distribution Tax Implications

[rsanders217]

I have a Roth 457 through my government job that I will be leaving soon. I also have a personal Roth IRA account. I have only made post-tax contributions to each and both accounts are more than 5 years old. I am under 59.5 years old.

If I do a direct rollover of the Roth 457 to the Roth IRA, can I then withdraw the post-tax contributions I made to both accounts tax and penalty-free? My understanding is that Roth withdrawals follow ordering rules where contributions are distributed first and tax-free at any time. Would that apply to the contributions originally made to the Roth 457 once they are rolled over into the Roth IRA?

[dmertz · Accepted solution]

"If I do a direct rollover of the Roth 457 to the Roth IRA, can I then withdraw the post-tax contributions I made to both accounts tax and penalty-free?"

Yes.  Your contribution basis in the Roth 457(b) becomes contribution basis in the Roth IRA.  The Roth IRA ordering rules apply to Roth IRA distributions no matter how the funds came to be in the Roth IRA.  This is one reason that people roll funds from a designated Roth account in an employer plan over to a Roth IRA, to be able to access all of their contribution basis without the distributions being pro-rated between nontaxable and taxable amounts.