How to Roll Over a Roth 401(k) to a Roth IRA: Steps, Taxes, and Timing

To roll over a Roth 401(k) to a Roth IRA, ask your plan administrator for a direct rollover to a Roth IRA you’ve already opened, have any pre-tax employer match sent separately to a traditional IRA, and keep the paperwork for your tax return. Done this way, the transfer is not taxable and nothing is withheld. The traps are all in the details: an indirect rollover triggers mandatory withholding, employer matching dollars can’t ride along into the Roth IRA tax-free, and the Roth IRA’s five-year clock for tax-free earnings doesn’t inherit the time your money already spent in the 401(k).

When You Can Roll Over

The usual trigger is leaving the job. Once you separate from service — whether you quit, retire, or are laid off — you have full access to your vested Roth 401(k) balance and can move it to a Roth IRA on your own timeline. There’s no deadline forcing you to act, and no benefit to delaying once you’ve decided.

If you’re still employed by the plan sponsor, your options are narrower. Most plans allow an in-service distribution once you reach age 59½, and some permit rollovers if you become disabled or if the plan is terminated.¹ Outside those situations you’ll have to wait.

Roth 401(k) money can only move to another designated Roth account in a new employer’s plan or to a Roth IRA.² It cannot go into a traditional IRA, a SEP IRA, or any other pre-tax account.³

One worry you can set aside: the income phase-outs that limit annual Roth IRA contributions don’t apply to rollovers. Rollover contributions are excluded from the annual contribution limit, so the income-based reduction of that limit doesn’t reach them either.⁴ A high earner can roll over the entire balance in one transaction with no cap.⁵

Use a Direct Rollover, Not an Indirect One

This is the single most consequential choice in the process.

In a direct rollover, the plan administrator sends your balance straight to the Roth IRA custodian. The check is made payable to the new institution “for the benefit of” you, so the funds never touch your personal bank account. Nothing is withheld, and there’s effectively no risk of the IRS treating the transaction as a distribution.⁶

In an indirect rollover, the plan pays you personally. When that happens the plan must withhold 20% for federal income taxes, even though your Roth contributions were already taxed.⁶ You then have 60 days to deposit the full original amount into a Roth IRA.⁷

The catch is that “full original amount” means the pre-withholding figure, not the check you received. If your distribution was $50,000 and $10,000 was withheld, you still need to put $50,000 into the Roth IRA within 60 days, which means covering the missing $10,000 from your own pocket until the withheld amount comes back as a refund when you file. Anything short of the full amount is treated as a taxable distribution, and if you’re under 59½ a 10% early withdrawal penalty can apply.⁸ Miss the 60-day window entirely and the whole distribution becomes taxable, with only narrow IRS waivers available for events like a natural disaster or serious illness.⁹

Pick direct unless you have a specific reason not to.

Step-by-Step: Completing the Transfer

The active work takes a few days. Processing by the plan administrator usually adds another week or two.

Open a Roth IRA first if you don’t already have one. Any brokerage or bank that offers Roth IRAs will do. You’ll need the account number and the custodian’s mailing address before you can fill out the rollover paperwork.
Request the distribution or rollover election form from your former plan administrator, either through the participant portal or by phone.
On the form, select “direct rollover” and enter the Roth IRA custodian’s name, your new account number, and the custodian’s mailing address.
If your 401(k) includes pre-tax employer matching contributions, tell the administrator to split the rollover. The Roth portion goes to the Roth IRA; the pre-tax match goes to a traditional IRA (unless you’ve chosen to convert it, discussed below).
Provide spousal consent if the plan requires it. Some plans do, depending on the type of benefit provided, and the administrator will tell you if it applies.¹
Submit and wait. Processing typically runs five to ten business days. The administrator will either wire the funds or mail a check to the custodian. If a check is mailed to your home address by mistake, forward it unopened to the Roth IRA custodian. Do not deposit it in your personal account.

Double-check the receiving account number, the custodian’s tax identification number, and the mailing address before you submit. One wrong digit can stall the transfer for weeks.

What Happens to the Employer Match

Federal rules require employers to allocate all matching contributions to a pre-tax account, even when the match corresponds to Roth deferrals you made.¹⁰ Those pre-tax dollars cannot be dropped into your Roth IRA tax-free.

You have two choices for the match portion. Roll it into a traditional IRA and nothing is taxed now; the money continues growing tax-deferred until retirement. Or roll it into your Roth IRA and treat it as a Roth conversion, which adds the full match amount to your taxable income for the year at your ordinary rate. Most people pick the traditional IRA route to keep the rollover tax-free; converting makes sense only if you’re prepared to pay the tax bill now in exchange for tax-free growth later. Specify your choice on the distribution form.

The Five-Year Clock Starts Over

Roth accounts require a five-year holding period before earnings can be withdrawn tax-free. The clock on your Roth 401(k) and the clock on your Roth IRA are separate. Time spent in the Roth 401(k) does not count toward the Roth IRA’s five-year period.¹⁰

The Roth IRA’s clock starts on January 1 of the tax year you first fund any Roth IRA. If you opened one years ago, the rolled-over earnings become eligible for tax-free withdrawal as soon as they arrive (assuming you’re also 59½ or older). If the rollover is your first Roth IRA money, the five-year wait starts with the rollover year.

The practical takeaway: if a rollover is anywhere in your future, open a Roth IRA now with a small contribution to get the clock running. The five-year rule applies only to earnings. Your original Roth 401(k) contributions were already taxed, so that basis can come out of the Roth IRA at any time without taxes or penalties.¹¹

Tax Forms You’ll Receive

A properly executed direct Roth-to-Roth rollover doesn’t produce a tax bill, but the IRS still wants to see the paper trail.

Form 1099-R From the Old Plan

Your former plan administrator issues Form 1099-R for the year the distribution occurs. On a direct Roth 401(k) to Roth IRA rollover, box 1 shows the total transferred, box 2a shows zero as the taxable amount, and box 7 contains distribution code H, which identifies the transaction as a direct rollover from a designated Roth account.¹² You’ll have it by early February of the following year.

Form 5498 From the New Custodian

The Roth IRA custodian reports the incoming rollover on Form 5498, with the amount in box 2.¹³ It often doesn’t arrive until May because custodians have until the end of that month to file. Compare the rollover amount on Form 5498 to the gross distribution on Form 1099-R; they should match.

Your Tax Return

Report the distribution on your federal return even though no tax is due. The 1099-R tells the IRS the money left a retirement plan; your return confirms where it went. If you also took a distribution from the Roth IRA during the same year, you may need Form 8606 to report your Roth IRA basis and determine whether any of the distribution is taxable.¹⁴ Keep both forms and your distribution paperwork indefinitely.

If You Inherited the Roth 401(k)

Rollover rules shift if the account came to you from someone else. A surviving spouse can roll an inherited Roth 401(k) into their own Roth IRA and treat it as always theirs, with full control, no lifetime required distributions, and the ability to name new beneficiaries.¹⁵

Non-spouse beneficiaries cannot roll an inherited Roth 401(k) into their own Roth IRA. They generally must empty the inherited account within ten years of the original owner’s death.¹⁵ The distributions are tax-free if the original owner had satisfied the five-year holding period, but the money has to come out on schedule either way. The plan document controls the available distribution options, so contact the plan administrator early to understand what’s on the table.

1
Internal Revenue Service. 401(k) Resource Guide – Plan Participants – General Distribution Rules
2
Office of the Law Revision Counsel. 26 USC 402A – Optional Treatment of Elective Deferrals as Roth Contributions
3
Internal Revenue Service. Rollover Chart
4
Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs
5
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
6
eCFR. 26 CFR 1.401(a)(31)-1 – Requirement to Offer Direct Rollover of Eligible Rollover Distributions
7
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
8
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
9
Office of the Law Revision Counsel. 26 USC 402 – Taxability of Beneficiary of Employees Trust
10
Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts
11
Internal Revenue Service. Retirement Topics – Designated Roth Account
12
Internal Revenue Service. Instructions for Forms 1099-R and 5498
13
Internal Revenue Service. Form 5498 – IRA Contribution Information
14
Internal Revenue Service. Instructions for Form 8606
15
Internal Revenue Service. Retirement Topics – Beneficiary