How To Roll Over A Roth 401k To A Roth IRA

Changing jobs, approaching retirement, or simply wanting to streamline your finances—these moments often prompt a closer look at your retirement accounts. If you have a Roth 401(k) from a former employer, moving those savings to a Roth IRA can open up a world of investment possibilities, simplify your recordkeeping, and help you keep more of your hard-earned money growing tax-free. But as attractive as these benefits sound, the process is anything but automatic. Between IRS rules, five-year clocks, and choices about how to move your funds, a misstep could mean unexpected taxes or penalties.

That’s why understanding the mechanics of rolling over a Roth 401(k) to a Roth IRA is so critical. Whether you’re a business owner, HR professional, or an individual plan participant, this guide will walk you through every essential detail—from confirming eligibility and navigating distribution rules to choosing the right rollover method and avoiding common pitfalls. Along the way, you’ll get clear definitions of key terms and actionable steps to ensure your transition is smooth and compliant. Ready to take control of your retirement savings with confidence? Let’s break down exactly how to make your Roth 401(k) rollover work for you.

Confirm Eligibility and Plan Requirements

Before you initiate a rollover, make sure that both your Roth 401(k) plan and your own situation meet the basic IRS and plan-specific requirements. Generally, you can roll over a Roth 401(k) if you’re a plan participant who’s left the company, reached age 59½ (depending on plan terms), or if the plan permits in-service distributions. Even if you meet IRS criteria, each plan has its own distribution rules and timing windows you’ll need to follow.

Once you’ve confirmed eligibility on paper, the next steps are to review the specifics of your employer’s plan, ensure you have a suitable Roth IRA in place, and identify exactly which funds you can—and cannot—move. The sections below will walk you through each of these elements.

Review Your Roth 401(k) Plan’s Distribution Rules

Start by pulling your plan’s Summary Plan Description (SPD) or logging into your participant portal. If you don’t have easy access, a quick call or email to your plan administrator will get you the details you need. Look specifically for:

• Distribution triggers: Termination of employment, reaching plan-specified age, or qualifying hardship events
• Minimum balance requirements: Some plans only allow rollovers if your vested balance exceeds a set dollar amount
• In-service rollover provisions: Whether you can move money while still employed
• Timing windows and blackout periods: Deadlines for requesting a distribution or blackout dates around plan conversions

Knowing these restrictions up front prevents surprises—like requesting a distribution only to learn you’re still ineligible.

Verify Your Roth IRA Account Status

You can’t send funds to a Roth IRA that doesn’t exist. If you already have one, confirm it’s open and ready to accept rollovers. If you need to open a new Roth IRA, here’s a quick roadmap:

1. Compare online brokers or custodians based on fees, investment options, and customer service.
2. Complete the IRA application—typically a short online form requiring Social Security number, beneficiary information, and funding source.
3. Verify your identity (you may need to upload a copy of your driver’s license).
4. Fund the account with a small deposit (this isn’t your rollover; it simply activates the account).
5. Record your new account number and the custodian’s mailing or electronic transfer instructions.

Having this IRA fully set up before you request any money from your 401(k) keeps the process smooth and avoids timing delays.

Identify Rollover-Eligible Funds

Most of your Roth 401(k) balance—both your after-tax contributions and the earnings on those contributions—can move into a Roth IRA. But certain distributions aren’t eligible for rollover:

• Hardship withdrawals
• Corrective distributions of excess contributions
• Deemed distributions from defaulted plan loans
• Any required minimum distributions (RMDs) already taken

For a deeper dive into after-tax balances and rollover rules, see Fidelity’s guidance on rolling after-tax money in a 401(k) to a Roth IRA. Identifying the precise dollar amounts and sources in your account statement will help you avoid rolling in ineligible funds—and triggering unwanted tax consequences.

Understand the Five-Year Rule and Qualification Periods

When you roll over a Roth 401(k) into a Roth IRA, you’re actually juggling two separate five-year clocks—and each one affects when your withdrawals can come out tax-free and penalty-free. Ignoring either clock could land you with unexpected taxes on the earnings portion of your rollover. Below, we break down how each holding period works and what it means for your distributions.

Roth 401(k) Five-Year Holding Period

Your Roth 401(k) has its own five-year period, which starts on January 1 of the year you first made a designated Roth contribution to that plan. That clock determines whether a distribution from your Roth 401(k) is “qualified” (i.e., tax- and penalty-free) before it ever hits your IRA.

According to the IRS:

“When you roll over a distribution from a designated Roth account to a Roth IRA, the period that the rolled-over funds were in the designated Roth account does not count toward the five-year period for the Roth IRA.”
—IRS Retirement Plans FAQs on Designated Roth Accounts

In practice, that means you can’t borrow credit for your Roth 401(k) time toward your Roth IRA’s five-year rule—even if you roll everything over on day one. If you meet both age and holding-period criteria while still in your Roth 401(k), your rollover will carry a qualified status over to your IRA, but only for the portion deemed qualified under these rules.

For more details on the Roth 401(k) clock and its quirks, see the IRS FAQ: https://www.irs.gov/retirement-plans/retirement-plans-faqs-on-designated-roth-accounts

Roth IRA Five-Year Rule and Qualified Distributions

Once your funds land in a Roth IRA, they enter a new five-year cycle that begins on January 1 of the tax year when you first contributed to any Roth IRA you own—regardless of whether that contribution was a rollover or a regular deposit.

To make a qualified distribution from a Roth IRA, you must satisfy both of these conditions:

1. Five-Year Rule: The account has been open at least five years.
2. Qualifying Event: You are at least age 59½, you’re disabled, the distribution follows your death, or you’re using up to $10,000 for a first-time home purchase.

Under Roth IRA ordering rules, withdrawals come out in this order:

1. Regular contributions (always tax- and penalty-free)
2. Conversion and rollover amounts (tax- and penalty-free once five years have passed for each conversion)
3. Earnings (tax- and penalty-free only if both five-year and qualifying-event tests are met)

For a deeper dive into Roth IRA distribution rules, check out Investopedia’s Roth rules: https://www.investopedia.com/articles/retirement/09/roth-401k-rollover.asp#toc-roth-rules

Tax and Penalty Implications

Whether your rollover earns qualified status makes a big difference on the tax return:

• Qualified Rollover
  If both your Roth 401(k) and Roth IRA five-year clocks have ticked past year five and you meet a qualifying event, all rolled-over earnings become part of your IRA’s basis. Future distributions of earnings will be tax- and penalty-free.

• Nonqualified Rollover
  If either clock is still under five years, earnings that roll over are treated as nonqualified. That portion remains subject to ordinary income tax—and a 10% early-withdrawal penalty if you’re under 59½—until you satisfy both the five-year and qualifying-event tests in your IRA.

Example:
You opened a Roth IRA in 2019 and first contributed in March of that year. You roll over your Roth 401(k) in February 2024.

• Your IRA five-year clock resets to January 1, 2019, so qualified status arrives January 1, 2024.
• Since your rollover lands before that date, any earnings you move will be nonqualified and could trigger taxes if withdrawn before you turn 59½.

Keeping track of both five-year periods—and planning your rollover around them—ensures you maximize the tax advantages of your Roth accounts.

Compare Direct (Trustee-to-Trustee) and Indirect Rollovers

Retirement savers have two primary options to move funds from a Roth 401(k) into a Roth IRA: a direct rollover, also known as a trustee-to-trustee transfer, and an indirect rollover, often called a 60-day rollover. Each method comes with its own timeline, paperwork requirements, and risk profile. Understanding these differences helps you avoid withholding surprises, missed deadlines, or unintended tax hits.

Direct Rollover: Process and Advantages

In a direct rollover, you instruct your Roth 401(k) custodian to send the funds straight to your Roth IRA custodian—no check made out to you and no withholding. Because the money never touches your bank account, there’s no risk of missing the IRS deadline or triggering mandatory tax withholding. Most employers and brokerages provide a simple transfer form or online portal where you:

1. Specify your Roth IRA account details (account number, custodian name, transfer address).
2. Authorize the trustee-to-trustee transfer by signing and submitting the required documents.
3. Wait for confirmation—typically a few days to a couple of weeks—then verify the full balance arrived in your Roth IRA.

This route is the cleanest: taxable income is never generated, and you avoid the administrative hassle of tracking withholdings.

Indirect Rollover: Risks and Requirements

An indirect rollover involves receiving a distribution check made payable to you and then redepositing it into a Roth IRA within 60 days. Key points to keep in mind:

• Mandatory Withholding: Your plan administrator must withhold 20% for federal taxes if the check is paid to you. To avoid tapping into your savings, you’ll need to replace the withheld portion out of pocket when you deposit the full amount into your IRA.
• Tight Deadline: You have exactly 60 days from the distribution date to complete the rollover. Missing that window converts any unrolled amount into a taxable distribution, and a 10% early-withdrawal penalty may apply if you’re under age 59½. During the COVID-19 emergency, the Department of Labor temporarily extended the window and relaxed certain rollover rules, but those relief provisions have since expired.
• Paper Trail: Track your check’s issue date, document deposits, and save Form 1099-R to support your tax return.

Given these moving parts, an indirect rollover is riskier and more hands-on. It’s generally only recommended if your plan won’t support a direct transfer or you need the funds briefly.

Choosing the Right Method

Selecting between direct and indirect rollovers comes down to certainty, timing, and your comfort with administrative tasks. Here’s a quick comparison:

Feature	Direct Rollover	Indirect Rollover
Tax Withholding	None	20% (unless you make up the shortfall)
IRS Rollover Deadline	Not applicable	60 days
Risk of Penalty	Very low	High if deadline is missed
Paperwork Burden	Minimal (custodian-to-custodian)	Moderate (tracking dates, forms)
Best For	Most savers	Limited scenarios only

If your plan and IRA custodians support a trustee-to-trustee transfer, a direct rollover typically offers greater peace of mind and fewer tax-reporting headaches. Reserve an indirect rollover for rare cases where a direct route isn’t feasible or you’re prepared to manage withholding and tight deadlines yourself.

Gather Required Documentation and Information

Before you kick off a rollover, having every piece of information at your fingertips makes the process smoother and keeps surprises to a minimum. In this section, we’ll outline all the documents, account details, and communication templates you’ll need from both your Roth 401(k) plan and your Roth IRA custodian. Gathering everything up front minimizes back-and-forth delays and sets you up for a hassle-free transfer of your retirement savings.

Information from Your Roth 401(k) Plan

Start by pulling together your Roth 401(k) plan’s statements and any distribution paperwork. You’ll want to collect:

• Plan name and sponsor details: Exactly how your plan is listed on IRS and custodian documents.
• Custodian contact information: Phone number, mailing address, and the team handling distributions.
• Account balance breakdown: Separate totals for your designated Roth contributions and any earnings.
  Example: Your quarterly statement might show “Roth Contributions: $30,000” and “Earnings: $5,200.”
• Eligible distribution amount: The precise dollar figure you can roll over, excluding ineligible items like hardship withdrawals or defaulted loans.
• Required plan forms: Some administrators require a signed Distribution Request or Rollover Authorization—keep blank copies on hand.

Having this roster of details ensures you fill out transfer paperwork correctly and know exactly which dollars are available for your rollover.

Information from Your Roth IRA Custodian

Next, verify the destination account details for your Roth IRA to avoid misdirected funds:

• IRA account number: One digit off could delay processing.
• Custodian name and mailing address: Where your rollover check or electronic transfer needs to head.
• Rollover instructions: Many brokers offer a specific transfer form or online portal—ask for a sample so you know what you’re signing.
• ACH or wire routing information: If you prefer an electronic transfer, get routing and account numbers in writing.
• Account registration: Confirm the exact name and Social Security number on file for your Roth IRA.

Even if you’ve held your IRA for years, a quick check against your custodian’s records prevents processing hiccups.

Completing Rollover Request Forms

With details from both sides in hand, filling out the forms becomes a breeze. Use this checklist to stay on track:

1. Review every field:
   • Enter your plan sponsor name, plan number, and participant ID or SSN.
   • Provide your IRA custodian’s details, account registration, and desired transfer type (direct vs. indirect).
2. Select your rollover method:
   • Trustee-to-trustee: Opt for a direct rollover to avoid withholding.
   • Indirect: Choose a distribution to you, then redeposit within 60 days (remember the 20% withholding rule).
3. Sign and date: Ensure your signature matches both plan and IRA registrations.
4. Attach supporting documents: A recent plan statement or proof of IRA activation is sometimes required.
5. Make copies: Scan or photocopy everything you submit—it’s your safety net.

Double-check names, account numbers, and the rollover amount before hitting “send.” With your paperwork in the mail or submitted online, you’re ready to move on to executing the transaction and confirming its successful completion.

Execute the Rollover Transaction

With your paperwork in place and account details verified, it’s time to move your money. Whether you choose a direct trustee-to-trustee transfer or an indirect rollover, following each step closely will help you avoid delays, withholding surprises, or unintended tax consequences.

Submitting a Direct Rollover Request

A direct rollover is the cleanest path: your Roth 401(k) custodian sends the funds straight to your Roth IRA custodian, and you never touch the money yourself. Here’s how to get it done:

1. Gather your completed Distribution Request or Rollover Authorization form and any required plan statements.

2. Contact your Roth 401(k) administrator—ideally by email so you have a written record. You might say:

   Subject: Request for Roth 401(k) Trustee-to-Trustee Rollover

   Hello [Administrator Name],

   I’d like to initiate a trustee-to-trustee rollover of my Roth 401(k) (Plan ID: 12345) to my existing Roth IRA at [Custodian Name]. My IRA account number is [XYZ-987654]. Please send all plan assets eligible for rollover directly to:

   [Custodian Name]
   Attn: Rollover Department
   123 Investment Blvd.
   City, ST 12345

   If you need any additional documentation, let me know. Thank you for your help.

   Best,
   [Your Name]
   [Participant ID/Last Four of SSN]

3. Provide your IRA custodian with a matching acceptance form or online request so they anticipate the incoming transfer.

4. Monitor both custodians for confirmation emails or letters. Expect the funds to arrive within 7–14 business days.

Handling an Indirect Rollover

If your plan won’t do a direct transfer, you’ll receive a check made payable to you. These steps keep you on track:

1. Confirm the exact distribution date and the gross amount you’ll receive.
2. Once the check arrives, immediately record its issue date and amount.
3. Deposit the full gross distribution into your Roth IRA within 60 days—not just the net after withholding. If your plan withheld 20%, you’ll need to make up the difference out of pocket to avoid taxes and penalties.
4. Set calendar reminders at 30 days and two days before the 60-day deadline.
5. Keep copies of the check stub, deposit slip, and any acknowledgment from your IRA custodian.

Confirming Transfer Completion

No matter which method you use, always verify that your rollover landed safely in your Roth IRA:

• Log into your Roth IRA account online and note the post-rollover balance. It should match the eligible distribution amount you requested.
• Compare the date of receipt against your plan’s distribution date to ensure there’s no gap.
• Save electronic statements or confirmations in a dedicated folder (e.g., “Rollover Documents”).
• Review your next Form 1099-R: it should show Code G (direct rollover) or Code H (direct rollover of a designated Roth account). A Code G rollover report means you owe no tax on the transaction.

By following these clear steps—submitting your requests, tracking deadlines, and confirming delivery—you can execute your Roth 401(k) rollover with confidence and keep your retirement savings growing tax-free.

Track Tax Reporting and Avoid Pitfalls

Once your rollover is complete, the last thing you want is an unexpected tax bill or audit trigger. Properly tracking tax forms and understanding reporting requirements keeps your rollover from becoming a headache come April. Below, we’ll walk through the key IRS forms you’ll see, how to report your rollover on your tax return, and common missteps to watch out for.

Understanding Form 1099-R and Form 5498

After your distribution, your Roth 401(k) plan administrator will send you IRS Form 1099-R, typically by January 31. Pay close attention to:

• Box 1 (Gross Distribution): Shows the full amount you rolled over.
• Box 2a (Taxable Amount): Should be zero for a direct rollover of Roth funds.
• Box 7 (Distribution Code):
  • Code G indicates a direct rollover to an IRA and means no tax is due.
  • Code H signals a direct rollover of a designated Roth account.

Meanwhile, your Roth IRA custodian will issue Form 5498 by May 31, reporting the rollover contribution. It won’t arrive in time for your tax return, but you don’t need to include it with your filing. Instead, keep it with your records to verify the rollover amount if the IRS comes calling.

Reporting on Your Tax Return

Here’s how to reflect your rollover when you file Form 1040:

1. Enter the full distribution from Box 1 of Form 1099-R on Line 5a (“Pensions and Annuities”).
2. Report the taxable amount (usually zero) from Box 2a on Line 5b.
3. Check the “rollover” box next to Line 5b to show that you moved the funds into another Roth account.

By indicating the rollover on Line 5b, you signal to the IRS that this isn’t ordinary income—even though it flows through your 1099-R. If you used an indirect rollover and had withholding, you’ll also report any taxes withheld (Box 4 of Form 1099-R) on the Payments section of Form 1040.

Common Mistakes and How to Avoid Them

Rolling over a Roth 401(k) to a Roth IRA can feel straightforward—until a small slip-up turns into extra taxes or penalties. Watch out for these top pitfalls:

• Missing the 60-Day Window (for indirect rollovers):
  Tip: Set calendar alerts at 30 and 55 days after your distribution to ensure timely deposit.
• Failing to Replace Withheld Funds:
  Tip: If you receive a check made out to you, add back the 20% withheld so your IRA sees the full distribution.
• Mixing Up Five-Year Clocks:
  Tip: Document both your Roth 401(k) and Roth IRA start dates to track qualified distribution status.
• Misreporting on Form 1040:
  Tip: Double-check that Box 2a reads zero and the “rollover” box is marked—otherwise, you could accidentally trigger taxable income.
• Ignoring Form 5498 Confirmation:
  Tip: When your IRA custodian sends Form 5498, verify the rollover amount matches your original request and save it with your tax files.

By staying organized, watching deadlines, and understanding the story your forms tell, you’ll sail through tax season with your rollover correctly reported—and your retirement savings intact.

Evaluate Post-Rollover Account Management Options

Once your Roth 401(k) funds are safely nestled in a Roth IRA, you get to steer your retirement savings with fresh flexibility—and a few new considerations. From choosing investments to juggling multiple accounts and watching evolving RMD rules, this phase is about making your rollover work harder for you over the long haul.

Expanding Your Investment Choices

Employer-sponsored Roth 401(k) plans typically offer a menu of core investments—mutual funds, target-date funds or a handful of ETFs chosen by the plan sponsor. A Roth IRA, by contrast, unlocks a nearly unlimited universe:

• Individual stocks, bonds, and commodities
• Niche or sector ETFs
• No-load and low-cost mutual funds
• Alternative investments like REITs or private-market securities (depending on your custodian)

This broader palette lets you tailor your portfolio more precisely to your risk tolerance, time horizon and goals. You can dial up dividend-growth stocks, add municipal bonds for state-tax benefits or experiment with small-cap funds that weren’t available in your old plan. Just remember to keep an eye on trading fees and account minimums as you diversify.

Consolidating Multiple Retirement Accounts

If you’ve worked for several employers over the years, you might have multiple Roth 401(k) or traditional 401(k) leftovers. Rolling them into a single Roth IRA can simplify:

• One statement instead of five
• A uniform investment policy across all assets
• Easier rebalancing and performance tracking

On the flip side, lumping everything together means you must track each original plan’s five-year clock and conversion dates separately, in case you ever need to isolate nonqualified earnings. A simple spreadsheet or retirement-account aggregator can keep you on top of:

• Rollover dates and source plans
• Contribution versus earnings breakdowns
• Individual five-year start dates for each batch of funds

Getting that housekeeping right ensures you maintain penalty-free access to your bases of contributions and rolled-over amounts.

RMD Rules Under SECURE Act 2.0

The SECURE Act 2.0 made a game-changing tweak: after 2024, Roth 401(k)s are no longer subject to required minimum distributions (RMDs) during the owner’s lifetime. IRAs—Roth and traditional—have never forced RMDs on Roth accounts. As a result:

• Funds in a Roth IRA can grow indefinitely, tax-free, without ever being forced out.
• Your heirs can still face inherited RMD rules, but you preserve maximum compounding power.
• If you stay in a Roth 401(k) past 2024, you’ll enjoy the same lifetime exemption as Roth IRAs.

That alignment eliminates one strong incentive for rolling Roth 401(k)s into IRAs (avoiding RMDs). But if you value consolidated reporting and a single investment platform, a Roth IRA is still a compelling home for your after-tax nest egg.

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Choosing the right post-rollover strategy depends on your appetite for DIY investing, your need for simplicity and how much you care about preserving multiple five-year clocks. If you’d rather hand off the details—investment selection, compliance checks and fiduciary oversight—consider partnering with Summit Consulting Group, LLC. Our independent 3(38) investment management and 3(16) administration services can help you streamline account management while keeping your retirement savings on track. Learn more at Geaux Summit 401(k).

Consider Special Situations and Exceptions

While most rollovers follow the standard path outlined above, some scenarios call for extra attention. Whether you’re still on the job, dealing with an outstanding loan, or facing a life event like disability or home purchase, these special situations can affect the timing, tax treatment, and eligibility of your rollover. Reviewing each below will help you plan around potential pitfalls and take advantage of any penalty exceptions.

Rollover While Still Employed vs After Leaving

Not all plans let you move money out while you’re still employed. If your Roth 401(k) offers an in-service rollover, you can transfer funds to a Roth IRA prior to termination—often subject to age or tenure requirements (for example, reaching age 59½ or completing a minimum of five years of service). Check your Summary Plan Description for any in-service provisions and required forms.

If you don’t qualify for an in-service rollover, you must wait until you leave the employer or reach a plan-specified distribution trigger. Once your employment ends, you’ll generally have full rollover rights, though some plans impose a short blackout period around the separation date. Planning your departure and rollover request in tandem ensures you don’t miss a window or inadvertently delay access to your Roth savings.

Loan Offsets and Hardship Distributions

If you borrowed against your Roth 401(k) and then left the company, any outstanding loan balance usually becomes a deemed distribution. That deemed distribution shows up on your Form 1099-R as a taxable event and is not eligible for rollover. Similarly, hardship withdrawals taken under plan rules are considered ineligible funds and must remain in the plan.

Before requesting a rollover, verify your plan statement for any loan offsets or corrective distributions. If a portion of your balance is tied up in a deemed loan distribution, you can’t roll that amount into a Roth IRA—only the portion that’s free and clear of loan obligations qualifies. Contact your plan administrator to get a precise breakdown of rollover-eligible dollars.

Disability, Death, or First-Time Homebuyer Exceptions

Under IRS rules, certain distributions avoid the 10% early-withdrawal penalty, even if you haven’t reached age 59½. While these exceptions typically apply to Roth IRAs, they can affect your rollover strategy as well:

• Disability: If you’re permanently disabled, distributions from either your Roth 401(k) or Roth IRA are penalty-free. You can roll eligible funds into a Roth IRA without worrying about the 10% penalty on withdrawals—though the five-year holding period still applies to earnings.
• Death: Beneficiaries of a deceased participant’s Roth 401(k) or Roth IRA can roll over inherited assets into an inherited Roth IRA under special rules. Penalties don’t apply, but required minimum distribution schedules must be followed.
• First-Time Homebuyer: Roth IRA owners can withdraw up to $10,000 of earnings penalty-free for a first home purchase. If you plan to use the funds this way, rollovers must land in a Roth IRA at least five years old to qualify for the exception.

Each exception has its own set of documentation requirements—such as a physician’s certification of disability or proof of home purchase—so gather supporting records before initiating a rollover. And remember, while these life-event exceptions can waive penalties, they don’t override the five-year holding periods that govern tax-free treatment of earnings.

By recognizing and planning for these special situations, you can ensure your rollover stays on track, takes advantage of any available penalty exceptions, and keeps your retirement savings working as hard as you have.

Answer Key Questions and FAQs

Navigating a Roth 401(k) rollover raises plenty of questions. Below are concise answers to the queries we hear most often, with links to authoritative sources where applicable.

Can I Roll a Roth 401(k) into an Existing Roth IRA?

Yes. You can move funds from a Roth 401(k) into a Roth IRA via a direct (trustee-to-trustee) transfer or an indirect rollover. A direct rollover avoids mandatory 20% withholding and reduces timing risk. Remember, the Roth 401(k)’s five-year holding period determines whether the distribution is qualified before it moves, but once the money lands in your Roth IRA, it follows your IRA’s five-year rule for qualified withdrawals. If either clock is under five years, any rolled-over earnings remain nonqualified and could be subject to tax and penalty until both conditions are met.

Are Roth 401(k) and Roth IRA Contribution Limits Separate?

Absolutely. In 2024, the Roth 401(k) limit is $23,000 (plus $7,500 catch-up for those 50+), and it rises to $23,500 in 2025 (plus the same catch-up). Meanwhile, Roth IRAs allow $6,500 of contributions in 2024 and $7,000 in 2025 (or $8,000 if you’re 50 or older). Each limit stands on its own, so rolling over doesn’t eat into your annual contribution room. For a detailed breakdown, see Investopedia’s comparison of Roth 401(k) vs. Roth IRA contribution limits.

What Should I Do with a Roth 401(k) After Leaving a Job?

When you leave an employer, you generally have three options for your Roth 401(k):

• Leave it in the old plan: Useful if you want to keep loan features or specialized investment options.
• Roll to a Roth IRA: Offers a broader investment menu, continued tax-free growth, and no lifetime RMDs.
• Roll to a new employer’s Roth 401(k): Keeps all your assets under one plan and may preserve loan arrangements.

Choosing the right path depends on your priorities—whether that’s maximizing investment choices, maintaining loan access, or simplifying account management. Always review plan provisions and fee structures before deciding.

Taking Action: Your Next Steps

You’ve made it through the mechanics, rules, and potential pitfalls of rolling over a Roth 401(k) into a Roth IRA. Now it’s time to put this roadmap into motion. Follow these simple steps to transition your after-tax savings smoothly and stay on top of every requirement:

1. Review your plan documents and confirm eligibility

   • Locate your Summary Plan Description or contact your plan administrator to verify distribution rules.
   • Double-check any in-service provisions or minimum balance requirements.

2. Ensure your Roth IRA is ready to receive funds

   • If you don’t already have a Roth IRA, open one with a custodian you trust.
   • Confirm account details—number, registration, and transfer instructions.

3. Decide on your rollover method

   • Opt for a direct (trustee-to-trustee) rollover when possible to avoid withholding and deadline risk.
   • If you must use an indirect rollover, track your 60-day window and replace any withheld amounts.

4. Submit your paperwork and monitor progress

   • Complete and sign all distribution or transfer forms for both your Roth 401(k) and Roth IRA custodians.
   • Save copies, follow up on confirmation notices, and verify the funds hit your Roth IRA balance.

5. File and verify your tax reporting

   • Watch for Form 1099-R (Code G or H) and Form 5498 next spring.
   • Report the rollover correctly on Form 1040 to ensure no unintended taxable income.

Taking these steps will help you secure tax-free growth, access a wider investment universe, and simplify your retirement-account management. If you’d rather delegate the details—from fiduciary compliance to investment oversight—Summit Consulting Group, LLC is here to help. Discover how our 3(16) administration and 3(38) investment management services can streamline your rollover and keep your retirement strategy on track. Explore our solutions at Geaux Summit 401(k).