Rollover to a Roth IRA or a Designated Roth Account
Are you eligible to receive a distribution from your 401(k), 403(b) or governmental 457(b) retirement plan?
You may want to note the differences between Roth IRAs and designated Roth accounts before you decide which type of account to choose. For example, when you reach age 70 1/2, you may have to take required minimum distributions from designated Roth accounts, but not from Roth IRAs.
Roth IRAs and designated Roth accounts only accept rollovers of money that has already been taxed. You will likely have to pay income tax on the previously untaxed portion of the distribution that you rollover to a designated Roth account or a Roth IRA.
Withdrawals from a Roth IRA or designated Roth account, including earnings, will be tax-free if you:
- have held the account for at least 5 years, and
- age 59½ or older;
- disabled; or
In addition, you can get a tax-free distribution after 5 years from a Roth IRA of up to $10,000 to buy your first home.