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My (potentially flawed) understanding of Roth IRAs is that you can take out contributions at any time without penalty. So if you put $5,000 in and it doubles in a year to $10,000, then you sell some stocks and withdraw $5,000 (or less) from the account, then I can use that $5,000 for anything and I don't have to pay taxes on it (except the taxes I payed before putting it in the IRA). The other $5,000 is earnings, and I would have to pay taxes on it if it were withdrawn before the age of 59.5 (with exceptions).

How is this affected by 401(k) rollovers? Is the money from the rollover also treated as a contribution with respect to the penalties I would (not) have to pay if withdrawn before retirement age? Or maybe just the amount from the 401(k) that was contributed from my paycheck, without earnings?

(I don't have any money in a 401(k) yet, I'm looking to start contributing to a roth 401(k))

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Just the amount contributed to the Roth 401k that you rolled over, not the conversions from regular 401k/traditional IRA (for those there are holding period limitation of 5 year from conversion), the earning on it or the employer's match (neither of these can be withdrawn without penalty as a non-qualified withdrawal).

However, I'd suggest not to withdraw from Roth IRA unless you're sleeping on a bench in a park and beg strangers for a piece of bread. This is the best retirement investment you can make while you're in the lower tax brackets, and withdrawing it would reduce dramatically your tax-free retirement income.

  • @user102008 that is not correct. Rollover from Roth to Roth keeps the attributes. – littleadv Dec 8 '13 at 20:02

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