I (29M) know it is not recommended to withdraw prior to retirement, but I also know that I can withdraw contributions made to my Roth IRA at any time tax and penalty free. However, I rolled a small amount of money from a prior Roth 401k into my Roth IRA two years ago. Is that money able to be withdrawn from the Roth IRA account tax and penalty free or not? I am having a hard time being able to tell from internet reading and was curious if anyone has prior experience.
I am considering purchasing a house (have a current and time-sensitive opportunity) and would like to have a bit more cash to work with. I have just $6500 in contributions in the Roth IRA, and $5400 of Roth 401k rollover contributions. I have about $185,000 in other retirement savings (Traditional 401k, Traditional IRA, remaining Roth IRA balance), so I am not super concerned about taking $11,000 out given I feel a bit ahead of the game at the moment.
I rolled over a Roth 401k to a Roth IRA. Can that money be withdrawn from the Roth IRA tax and penalty free?
byu/Pficky inpersonalfinance
Posted by Pficky
5 Comments
You can withdraw contributions from your Roth IRA at any time without paying taxes or penalties.
I’m also a bit fuzzy on withdrawing rollover funds. It appears the IRA has to be at least 5 years old, but it’s hard to say.
It looks like you can withdraw up to $10k without taxes and penalties for purchasing a home, so you’re probably ok.
As I understand it, unless you are over 59 1/2, the only thing that you can withdraw tax free from your Roth is your contribution, No dividends or appreciation
Discuss with a tax professional do there are no surprises…
Here’s the IRS page with a list of the rules and regulations:
[Roth IRAs | Internal Revenue Service](https://www.irs.gov/retirement-plans/roth-iras)
Whatever amount was contributions in the Roth 401k becomes part of the contributions in the Roth IRA, for the purposes of Roth IRA withdrawal.
Whatever amount was earnings in the Roth 401k becomes part of the earnings in the Roth IRA.
If you don’t recall what those amounts were, look for the Form 1099-R you received for the Roth 401k to Roth IRA rollover. Box 1 will list the total amount rolled over. Box 5 will list the amount of contributions that were part of box 1. The difference between box 1 and box 5 would be the earnings. You may also have some other statement from the 401k provider that breaks down these amounts.
Whatever the funds were in the Roth 401k, they maintain the same status in the Roth IRA in this case.
So, when you rolled the funds from the Roth 401k, if the $5,400 was made of $5,000 contributions inside the Roth 401k and $400 earnings inside the Roth 401k, then it transferred as $5,000 contributions and $400 earnings to the Roth IRA.
The Roth 401k provider was supposed to give you a statement of this amount. If you don’t have it, you should request it from them. (Edit: or get it from the 1099-R, as nothlit said).