I am 40 years old, and my Roth IRA account has been open for 6 years, funded close to the yearly maximum (est. $5000x6=$30,000 of contributions+ separate amount of earnings). One month ago, I rolled over my Roth 403 b account (est. $25,000) from the previous employer into my Roth IRA account. If I need to withdraw more than $30,000 from my Roth IRA to cover home buying expenses within a couple of months, I wonder whether the rolled over $25,000 would be considered as my contribution and tax- and penalty-free for withdrawal.
As the rollover consists of my contributions AND earnings made while they were in my Roth 403 b, I'm a bit confused if the 5 year rule (earnings can be distributed without penalty and tax after 5 years) applies to the portion of the rollover amount, i.e. my earnings within it. If this is the case, does the clock reset as of the last month when I made a rollover, or would it become part of my Roth IRA of 6 years old, which fulfills the 5 year rule?
Or would $25,000 (contributions+earnings all together from the old Roth 403 b) be considered as my contribution in the Roth IRA and can be withdrawn at any time just like my regular, yearly contributions tax- and penalty-free, which makes the above questions irrelevant?
Many thanks in advance.
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Only the portion of the amount rolled over from the 403(b) to the Roth IRA that represents your original contributions to the Roth 403(b) become contribution basis in the Roth IRA. This amount will be reported in box 5 of the code H 2019 Form 1099-R that you will receive reporting the rollover. Until you receive that form in early 2020 you'll need to look at your 403(b) transaction history or code BB amounts from past Forms W-2 to find your Roth 401(k) contribution basis that became Roth IRA contribution basis as a result of the rollover.
Because you made $30,000 of regular contributions to the Roth IRA, you'll certainly be able to obtain a distribution of $30,000 from the Roth IRA tax free as you stated. Whatever additional amount that you be able to distribute from the Roth IRA without any consideration of what the funds are used for will depend on the amount of contribution basis rolled over from the Roth 403(b). Beyond that, if you qualify as a first-home purchase you'll be able to take out $10,000 of earnings tax and penalty free.
Only the portion of the amount rolled over from the 403(b) to the Roth IRA that represents your original contributions to the Roth 403(b) become contribution basis in the Roth IRA. This amount will be reported in box 5 of the code H 2019 Form 1099-R that you will receive reporting the rollover. Until you receive that form in early 2020 you'll need to look at your 403(b) transaction history or code BB amounts from past Forms W-2 to find your Roth 401(k) contribution basis that became Roth IRA contribution basis as a result of the rollover.
Because you made $30,000 of regular contributions to the Roth IRA, you'll certainly be able to obtain a distribution of $30,000 from the Roth IRA tax free as you stated. Whatever additional amount that you be able to distribute from the Roth IRA without any consideration of what the funds are used for will depend on the amount of contribution basis rolled over from the Roth 403(b). Beyond that, if you qualify as a first-home purchase you'll be able to take out $10,000 of earnings tax and penalty free.
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