Does the guidance in IRS Notice #2014-54 apply to Roth 401k rollovers?
Specifically, is it possible to do a out-of-service rollover on a Roth 401k such that:
- The earnings are put in the Traditional IRA
- The basis (original contribution) is put in the Roth IRA?
The goal of this is such that, if necessary, the balance in the Roth IRA is immediately withdrawable without tax or penalty, excluding any earnings on the basis.
In this case, what is the tax treatment of the Roth 401(k) earnings that are now in the IRA? Are they taxed upon withdrawal? I assume the earnings on the earnings are taxable upon withdrawal.
It's also my understanding that all amounts in the Roth IRA, regardless of source, are not taxable as a qualified distribution (age 59 1/2 + 5 year rule).