topic Re: Roth IRA conversion Roth 401(k) in Retirement tax questions

Roth IRA conversion Roth 401(k)

ljmurray — Thu, 15 Jul 2021 16:29:24 GMT

I am considering converting my Roth 401k funds to a Roth IRA, to avoid the required minimum distributions which I understand are required by 401k rules but not required under IRA rules.

If I do so, will my funds all be subject to penalty if withdrawn before a new 5 year period?

And for either a Roth 401k or Roth IRA, if inherited (after the waiting period) will the beneficiary withdrawals be free of taxes also?

Re: Roth IRA conversion Roth 401(k)

mfields2 — Thu, 15 Jul 2021 22:27:06 GMT

The rollover would "start the clock" on the Roth IRA account, if that is your first contribution to a Roth IRA. If you already have a Roth IRA account, your clock is running (and may have already run completely).

Inherited Roth IRA's also inherit the "clock" - so if the clock has run, the funds come out tax free. Because death is a qualifying exception for the 10% penalty, the beneficiaries would be exempt from the early distribution penalty if they are under 59 1/2.