1 Earnings from a Roth designated 401(k) account and Roth IRA are federal income tax-free if the requirements for a “qualified distribution” are met. A qualified distribution generally occurs if the participant meets the five-year rule and is at least 59½, disabled or deceased. The five-year period for a Roth 401(k) begins on the first day of the tax year of your first designated Roth contribution to your account under the plan, whereas, for a Roth IRA, it begins on the first day of the tax year of your first contribution to any Roth IRA. If you receive a nonqualified distribution from your Roth designated 401(k) account or Roth IRA, any earnings distributed generally will be subject to federal ordinary income tax, plus a 10% additional federal tax.
*As a CPA and partner at Genske, Mulder & Company, Mr. Schultz is not affiliated with Merrill. Opinions provided are his, do not necessarily reflect those of Merrill and may be subject to change.
Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
Investing involves risk including possible loss of principal. Past performance is no guarantee of future results.
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Opinions are as of 01/28/2022 and are subject to change.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.