Does the Roth contribution have to stay in the plan for five years in order for the earnings to be tax-free?
Yes. To withdraw the earnings tax-free, the Roth contribution must remain in the plan for at least five years and the participant must have attained age 59½ (death and disability also qualify). Does the five-year period start as of the time of the first Roth contribution; or does each year’s Roth contribution have to be in the plan for five years before it is eligible to be withdrawn without taxation on the earnings? The five-year period is determined starting as of the date of the first Roth contribution. A Roth contribution in a subsequent year does not start a new five-year period.
Related Questions
- Does the minimum 5 year contribution period start as of the first Roth contribution, or there have to be 5 contributions in 5 years before earnings become tax-free?
- If Roth contributions are permitted in the plan, is it a given that younger workers will benefit more from the Roth contribution then from the pretax contribution?
- Do the Roth 401k Contributions have to remain in the plan for atleast 5 years, in order for the earnings to be tax-free?
