Roth 401(k) Rollover - What To Do with an Old Roth 401(k)? | Ed Slott and Company, LLC

Roth 401(k) Rollover - What To Do with an Old Roth 401(k)?

There is a lot of content to be found on what to do with an old traditional 401(k) and the options you have when leaving your current employer. I'm wondering what can be done with an old Roth 401(k)? If I already have a Roth IRA, can the old Roth 401(k) be rolled directly into that without any tax implications or being subjected to the pro rata rule? Thanks!

Yes, a Roth 401k account can be directly rolled into your Roth IRA with no current tax implications. The Roth IRA accounting would have to absorb the Roth 401k money according to the IRS Regs. If the Roth 401k was fully qualified (5 years and 59.5), the entire rollover would be treated as regular Roth IRA contributions. If the Roth 401k was non qualified, only the elective deferrals made to the Roth 401k would be treated as regular Roth IRA contributions. Any IRRs (in plan Roth rollovers) would be treated as Roth IRA conversions including carryover of the 5 year holding requirement to avoid the penalty. 

Thanks Alan. Would the Roth 401(k) rollover into the Roth IRA be subject to the $6000 max or is it okay to rollover a large sum from a Roth 401(k)?

Rollovers do not have dollar limits, so you can roll over any amount you wish. The rollover will not affect your regular contribution limit for the Roth IRA.

 

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