Withdrawing the Basis Tax-Free from Roth IRA and Roth 401(k)

[@AngellLevey]

Tax laws can be so complex, and it’s super helpful to break them down like this. Understanding how different policies can impact our finances is crucial for making informed decisions.

[@chrisdime]

Thank you for the encouragement! I agree it's all very complex though important.

[@chhinchhem3816]

Hi Chris, awesome content and I’m glad the algorithm lead me here viewing your video for the first time. My employer offers traditional 401k and ROTH 401k. I’m currently doing both. Which 401k account does my employer match contributions go to?

[@chrisdime]

I'm glad the algorithm led you to me as well! This is a really good question and I think I will make a video on this soon. Back in the day, your employer match went 100% into the Pre-Tax Traditional 401(k). Nowadays, however, employers are legally permitted to place that Match into your Roth 401(k), but I have NEVER seen an employer do this. This is because that match would be taxable to you as income in that year and there's no real benefit in an employer doing that to you. If you want the match to go to the Roth 401k you'll have to do an in-plan roth conversion. Hope that helps clarify!

[@nitra79]

Great video! I have both the Roth IRA and a Roth 401k. I am still not clear on the Roth 401k. Does the earning ever become tax free?

[@chrisdime]

Yes, but only through a "qualified distribution" = be over 59.5 and have this Roth 401(k) for at least 5 years. Please see timestamp 03:24 of this video -> kzbin.info/www/bejne/sJ2ldZVtZ76Mh5Y And see this IRS Article -> www.irs.gov/retirement-plans/roth-acct-in-your-retirement-plan *not a CPA, I always recommend speaking with your tax professional