Loan from ROTH account of 401k

[tertue]

If an employee takes a loan from the ROTH portion of their 401K, is the interest payment portion of the payback not taxable since ROTH profits are not taxable?

[Lou S.]

If they have they are paying back to a ROTH source and they have a qualified distribution (more than 5 years and after 59.5) then the gains (including interest on a loan) are non-taxable.

[tertue]

Deferral to the ROTH portion of the 401k was started over 5 years ago with a minimal amount of 1k. Employee wants to do an in-plan conversion of 49k to ROTH account bring the ROTH account to 50k.

Here's another question:

If there is 50K in the ROTH account and 50K in the pre-tax account, can a loan of 50K be taken from the ROTH account since the overall 401k account balance is 100K?

[Lou S.]

I do see why not. But that would be something that should probably be addressed by the loan policy as to source ordering priority for loans, or whether the participant can chose the source of loan.