Thinking about rolling over a Roth 401(k) to a Roth IRA after leaving your employer? Before you do, it’s important to understand how Roth 401(k) rollovers actually work, especially when your account includes employer matching contributions, pre-tax money, and after-tax Roth contributions.

Many people assume that because an account says “Roth,” every dollar inside it is automatically tax-free forever. But that is not always true. In this episode of Make It Personal, we answer Jennifer’s question about how Roth 401(k) to Roth IRA rollovers are tracked, what happens to employer pre-tax contributions, and whether choosing different investments inside the Roth IRA changes the tax treatment. You’ll learn how the IRS views Roth money versus pre-tax money, why rollovers often separate dollars into different IRA accounts, and when a Roth conversion may come into play. This episode is for anyone leaving a job, reviewing an old 401(k), planning retirement income, or trying to avoid tax surprises with Roth retirement accounts.

Highlights:

→ You’ll learn how Roth 401(k) dollars and employer match dollars are treated differently during a rollover.

→ We explain why pre-tax employer contributions usually do not simply become tax-free Roth IRA money, and why they may be moved into a Traditional IRA instead.

→ You’ll also hear why changing investments inside a Roth IRA, such as ETFs, mutual funds, stocks, or bonds, does not change the Roth tax status of the account.

→ We break down the difference between a rollover and a Roth conversion so you can better understand when taxes may apply and why planning matters.

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Investing involves risk, including loss of principal.

This podcast is for educational purposes only and may include references to concepts that have legal and/or tax implications. Mutual of Omaha Investor Services, Inc. does not provide tax or legal advice. Please consult with the appropriate professional regarding your personal situation prior to making any financial decisions. Strategies discussed may not be suitable for everyone. Securities and advisory services offered through Mutual of Omaha Investor Services, Inc. Member FINRA/SIPC. Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.