Rolling a Roth 401 (K)

Roth 401 (k) s are great tools for many people retirement. However, there are some rules that you can be aware of such activities.

If you leave an employer IRA, in general, you should always keep the rollover Roth 401 (k) to Roth. This is because the minimum distributions (RMD) are required Roth 401 (k) knows from the age of 70.5, while Roth IRA does not require from RMDS.

A wordCaution

Typically, Roth 401 (k) Roth IRA if it is necessary for both 59.5 and held the account for five years before the distribution is qualified, and therefore exempt from tax. However, if you have years in the possession of less than five times in the Roth 401 (k), the IRA does not count the time instead of a Roth.

For example, if the rollover Roth 401 (k) account before you meet the requirement of five years, all the time we discovered that Accountextinct, and the retention period of five years begins again. If the money into a new Roth IRA, you must wait five years before money can be so qualified.

In the meantime, if you like) held the Roth 401 (k for five years or more and you will reach the age of 59.5, rolling the funds into a Roth IRA lets you withdraw funds at any time and for any purpose, without taxes.

Thanks to my friend Jim Blankenship, CFP, for his thoughts.