I have a client +63 yo that has been contributing to his Roth 401k for + 5 years. He also has funds in the Traditional portion of his 401k Plan. He plans to retire in 2021. He does not have an existing Roth IRA. We understand that if he rolls the Roth 401k to a Roth IRA his 5-year clock would start. Part of his retirement plan is to use the funds from the Roth 401k for the construction of his retirement home in 2021. His Plan allows for in-service 401k distributions. When he retires in 2021, he plans to roll over his Traditional 401k to a Traditional IRA.
Would there be any negative impacts on his plan if he takes the in-service distribution from his Roth 401k in the same year that he rolls over his Traditional 401k to a Traditional IRA?