Yes.And if I recall correctly, the roth 5 year clock starts on Jan 1 of the year of the first contribution regardless - ie If I converted some nominal amount now, I’d in effect be 11.25 months into the 5 year clock. Am I understanding rhat correctly?
There are benefits if you want to use the money before you are age 59.5. A distribution before 59.5 from Roth 401k requires that the Roth contributions and earnings of those same contributions come out together, prorated....but at that point the earnings are still taxable.In general, are there benefits of having a Roth IRA over a Roth 401k?
Roth IRA has different rules. You can take out contributions without their earnings at any age.
The rule of 55 is not very helpful for Roth 401k because the earnings are still taxable at that point.I seem to recall, there were very distinct benefits between the two, but the differences diminished. For instance, I believe RMDs are no longer applicable with Roth 401ks. Once I hit 55 (couple years away) I would in theory be able to withdraw from Roth 401k post retirement (Rule of 55) although likely would want to put that off as long as possible.
Yes. This type of tax diversification gives more flexibility in retirement.Intertwined with these questions - I had traditionally only focused on pretax retirement accounts, and quickly realizing having buckets in pre-tax, roth, and after tax provides flexibility to maximize future conversions. Roth-like accounts now represent roughly 10% of retirement accounts and trying to open up more options with the account consolidation.
Statistics: Posted by retiredjg — Sat Dec 07, 2024 10:10 am — Replies 6 — Views 298