Q & A
How does the “five-year rule” apply to people over age 59 1/2?
Full question: I converted my company 401K to a Roth 401K in 2012. I am 68 and since I own more than 5% of my company I understand I will have to take the RMD when I reach 70 1/2 even though it’s a Roth 401K. Since I am over 59 1/2 does the five-year rule apply and can I roll this RMD into a Roth IRA that can be left in the estate?
Answer: The five-year rule that applies to conversions only applies for persons under age 59 ½. Your plan should have an “in-service” withdrawal feature that allows you to transfer the Roth 401(k) to a Roth IRA. No RMDs are required from your Roth IRAs even after age 70 ½ so that money can grow without RMD implications.
Source: Dan Moisand - MarketWatch.com, April 11, 2014
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