Roth IRA has at least 3 upsides compared to Roth 401(k):
- There are no required distributions with a Roth IRA, whereas distributions must start at age 72 with a Roth 401(k).
- One can withdraw Roth IRA contributions anytime, unlike Roth 401(k). With a Roth 401(k), tax- and penalty-free withdrawals before age 59½ generally are limited to loans and specific exceptions.
- More investment options, unless the Roth 401(k) offers a Self-Directed Brokerage Option (SDBO).
What are the other upsides of rolling over a Roth 401(k) to a Roth IRA?
- I am not asking whether to contribute to either Roth 401(k) or Roth IRA.
- After converting after-tax 401(k) into Roth IRA, can the 401(k) contributions be withdrawn from the IRA without penalties?