I searched the boards for about 15 minutes (yes- I could have searched longer...), but I could not find a thread covering my exact situation. Here's the background:
Questions:
1) If I rollover the $37k from my Roth 401k to the Roth IRA, I *think* there is a "5 year clock" that starts for the entire $37k. The fact that the $15k was contributed to the Roth 401k over 5 years ago is irrelevant. However, the $22k in gains within Roth 401k will be treated as a contribution to the Roth IRA, therefore the "5 year clock" starts on this portion upon the rollover from Roth 401k to Roth IRA. 5 years after executing this rollover, I can withdraw the $37k without tax and without penalty, correct?
2) I know that the key to avoiding penalties with the Roth Ladder is that contributions are to be withdrawn before gains. Respective of the answer to question 1, what is the order of withdraws from my Roth IRA I will be forced to take (before age 59-1/2) if I execute this rollover? Will I take Roth 401k rollovers (Mega Backdoor Roth contributions) before rollover-withdraws from my post tax contributions? Will I take rollover-withdraws from my post tax contributions before Roth 401k rollovers?
I likely will have more questions based on the answers, should someone be so kind as to educate me. Thank you in advance.
- 2014- Started making Roth 401k contributions within a (former) employers plan.
- 2015- Stopped Roth 401k contributions. Total contributions to the Roth 401k were around $15k
- 2017- Opened a Roth IRA
- 2018 to today (and for 5-10 years to come)- Several rollover-withdraws from the After-Tax portion of my employer 401k's to my Roth IRA (i.e. Mega Backdoor Roth)
- Current Roth 401k balance is $37k ($15k in contributions + $22k in gains)
Questions:
1) If I rollover the $37k from my Roth 401k to the Roth IRA, I *think* there is a "5 year clock" that starts for the entire $37k. The fact that the $15k was contributed to the Roth 401k over 5 years ago is irrelevant. However, the $22k in gains within Roth 401k will be treated as a contribution to the Roth IRA, therefore the "5 year clock" starts on this portion upon the rollover from Roth 401k to Roth IRA. 5 years after executing this rollover, I can withdraw the $37k without tax and without penalty, correct?
2) I know that the key to avoiding penalties with the Roth Ladder is that contributions are to be withdrawn before gains. Respective of the answer to question 1, what is the order of withdraws from my Roth IRA I will be forced to take (before age 59-1/2) if I execute this rollover? Will I take Roth 401k rollovers (Mega Backdoor Roth contributions) before rollover-withdraws from my post tax contributions? Will I take rollover-withdraws from my post tax contributions before Roth 401k rollovers?
I likely will have more questions based on the answers, should someone be so kind as to educate me. Thank you in advance.
Statistics: Posted by SlickJohannes — Fri Jul 19, 2024 8:58 pm — Replies 0 — Views 176