Roth 401k Rollover
Rolling over one plan to another plan simply means taking one and putting it into another. That's simple enough, but the rules vary from one plan to another, especially the five year rule. If you have a Roth 401k plan with one employer that is three years old, and you change jobs to another employer who also has a Roth 401k plan, you can roll your old plan into your new one. Your new plan begins when you start contributions through your new employer and you now must wait five years before any withdrawals can be made. But if you roll over your Roth 401k from your former employer, your new Roth 401k plan now becomes three years old.
Now if you have a Roth 401k plan and you leave your employer, but your new employer does not have a Roth 401k plan, you can roll over the Roth 401k plan to a Roth Ira. There is a glitch here. Say your Roth 401k is 4 years old, but your Roth Ira is 1 year old. When you roll your Roth 401k into your Roth Ira it will be only one year old. This really shouldn't be too much of a problem as we assume you are planning to have this investment for a long time. Don't know what the logic for this is, but there you are! You are never allowed to roll a Roth Ira into a Roth 401k. |