Roth 401k Withdrawal
If you are over 59 1/2 and you have a Roth that you converted from after tax contributions in a 401k plan do you have to wait 5 years to withdraw without penalty the original principal not any earnings? I assume there is no age penalty but why would you have to pay taxes on after tax contributions if withdrawing prior to the 5 years
You can withdraw your Roth contribution anytime with no penalty. However, the portion of the interest earned or growth will need to remain in the account for 5 years prior to the withdrawal in order to avoid the early penalty of 10% for the federal. Please be aware that some states impose an early withdrawal penalty as well. Assuming you are over 59 1/2 years, you won't need to be concerned about the penalty on the portion of the growth as long as it stays in your account for 5 years. There is an interesting fact that the 5 year period starts counting down with the first account opening. All subsequent Roth money contributed will be part of the original contribution.