Roth 401-k withdrawal rules

[RWG1950]

It is my understanding that a regular contribution made to an individual Roth IRA gets credited (for the 5 year clock) on Jan 1st of the contribution year,
regardless of when made, so a regular Roth contribution made on 4-15 for the prior tax year is deemed to have been made on 1-01 of the prior tax year.
Assuming this to be true, withdrawals under a qualifying event (i.e. age 59 1/2 etc) can be made as early as 3 years and 8 1/2 months later. (conversions are treated differently)
Roth principal resulting from regular contributions is always immediately available tax & penalty-free, but under the above, the entire account is available tax-free.
Do the withdrawal rules on Roth 401-k's also work this way ?

[TaxGuyBill]

I think so. The FAQ from the IRS reads the same way as the IRAs.

https://www.irs.gov/retirement-plans/retirement-plans-faqs-on-designated-roth-accounts#Distributions

But just to clarify, the 5-year clock is just ONE of the criteria to be completely tax free. You also must meet one of the other criteria (such as being over 59.5).

[Lion]

Have your client read his Roth 401(k) plan summary to see if there is anything specific to his plan.

[Dude]

also contributions to Roth 401k must be made by 12/31 so you do not get the extra 3 1/2 month benefit

https://www.irs.gov/pub/irs-pdf/p560.pdf

[TaxGuyBill]

also contributions to Roth 401k must be made by 12/31 so you do not get the extra 3 1/2 month benefit

https://www.irs.gov/pub/irs-pdf/p560.pdf

The employer portion can wait until April 15th.

[Dude]

The employer portion can wait until April 15th.

But since it is a match they employee would still have had to contribute by year end. According to this article the hassle of the Roth 401k match makes it undesirable to employers anyway

https://www.investopedia.com/ask/answers/102714/are-roth-401k-plans-matched-employers.asp

[TaxGuyBill]

But since it is a match they employee would still have had to contribute by year end. According to this article the hassle of the Roth 401k match makes it undesirable to employers anyway
https://www.investopedia.com/ask/ans...-employers.asp

It doesn't necessarily need to be a match. The employer can contribute a percentage of taxable compensation. In the case of a Solo 401k, the person has an employer portion and an individual portion. The employer portion works pretty much like a SEP contribution.