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Roth Contributions vs. Roth Conversions in 401(k) and 403(b) Plans

Picture of Alana Jennings Alana Jennings : Updated on September 22, 2026

Retirement TruePlan Featured

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Designated Roth contributions and in-plan Roth conversions, technically called in-plan Roth rollovers, are subject to different five-year rules within 401(k) and 403(b) plans. Understanding the distinction can help plan sponsors and HR professionals communicate important distribution considerations to participants. Continue reading to learn more.

Understanding the 5-year rules for Roth contributions and conversions

The IRS treats designated Roth contributions and in-plan Roth conversions within a 401(k) or 403(b) plan as separate money types. Two different “five-taxable-year" rules may apply.

Contribution period: This is the single, five-year qualified distribution period for the entire designated Roth contribution account. It begins on Jan. 1 of the taxable year in which the participant first makes a designated Roth contribution to the plan and does not restart for later contributions.
Conversion period: Each in-plan Roth conversion has its own five-year qualification requirement, beginning on Jan. 1 of the conversion year. This period runs separately from the account’s contribution period.

Contribution period

The contribution period is one of two requirements that determine when earnings in the designated Roth account may be distributed tax-free as part of a qualified distribution. In addition to satisfying the five-year qualification requirement, the participant must reach age 59½ by the benefit commencement date to avoid the 10% early withdrawal penalty.

Contribution period example:

The first designated Roth contribution made at any time in 2025 starts the period on Jan. 1. The five-year qualification requirement is satisfied on Dec. 31, 2029. A tax-free distribution of earnings in the Roth contribution account would, therefore, be possible Jan. 1, 2030, at the attainment of age 59 ½.

Conversion period

Conversions made in different taxable years have their own separate five-year qualification requirement, no matter when the designated Roth contribution account was established. To receive a converted Roth account distribution tax-free as part of a qualified distribution, the converted amount in that specific year must meet the five-year qualification requirement. Additionally, the participant must reach age 59 ½ to avoid the 10% early withdrawal penalty.

Conversion period example one:

A conversion completed at any time in 2026 has a qualification period beginning Jan. 1, 2026. The five-taxable-year period is completed after Dec. 31, 2030. A tax-free distribution of earnings in the Roth conversion account would, therefore, be possible Jan. 1, 2031, at the attainment of age 59 ½.

Conversion period example two:

Subsequent conversions completed at any time over multiple years will have their own qualification period:

March 2026 conversion: $20,000
- Qualification period: Jan. 1, 2026 - Dec. 31, 2030
September 2027 conversion: $20,000
- Qualification period: Jan. 1, 2027 - Dec. 31, 2031
June 2028 conversion: $20,000
- Qualification period: Jan. 1, 2028 - Dec. 31, 2032

Key takeaway

Regardless of when a plan participant starts contributing to their designated Roth account, each Roth converted amount has its own five-year qualification period. As HR professionals field more questions with the growth of 401(k) and 403(b) Roth accounts, it’s important to remember these separate money types follow unique and separate schedules.

IRS resources

For additional guidance on designated Roth accounts, plan sponsors and participants can review the IRS' Retirement Plans FAQs on Designated Roth Accounts and Retirement Topics: Designated Roth Account, which provide detailed information on Roth contributions, distributions, rollovers and in-plan Roth conversions.

How TruePlan^® can help

Navigating Roth contribution and conversion rules can be complex, particularly as plan participants ask more questions about retirement income and tax diversification strategies. The retirement plan consultants at TruePlan Benefit and Retirement Advisors^® work with plan sponsors to provide fiduciary guidance, governance support, participant education and strategic retirement plan consulting to help organizations manage their 401(k) and 403(b) plans.

This article is for informational purposes only and is not individualized investment, tax or legal advice. Roth contributions and in-plan Roth conversions have different tax consequences. Plan and benefit requirements vary. Individuals should consult their appropriate professional advisers before making decisions.