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I know that with a Roth IRA, contributions can be withdrawn penalty-free at any time. If I rollover a Roth 401k into a Roth IRA, can I do the same with the contributions made to the Roth 401k?

I've read that the entire Roth 401k->Roth IRA rollover counts for penalty-free/tax-free early withdrawal, but that sounds too good to be true.

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I spent some time searching, and couldn't find the answer written explicitly in IRS regulations.

What I did find was this chart from the irs showing that nonqualified distributions from a Roth 401k are pro-rated between contributions and earnings.

It is well documented that you can't withdraw any money early or tax free (even contributions) from a Roth 401k ("Designated Roth Account" in IRS parlance) that has made any money. source

You can do a direct rollover from a "Designated Roth Account" to a Roth IRA and the basis describing contributions vs. earnings is preserved. source

And there is plenty of evidence showing you can withdraw contributions from a Roth IRA without penalty. source

All that being said, I can't find anything from the IRS that says this is a legitimate strategy.

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  • Thanks, that's along the lines of what I've been seeing when I look into it, too.
    – Andrew Coleson
    Apr 12, 2011 at 6:06

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