A friend transferred the balance of her 401k plan (begun while working for a former employer) to a Roth IRA in 1998. Was this rollover taxable? Would the same transaction be taxable today?

Actually, you can't roll a distribution from a 401(k) directly into a Roth IRA. What likely happened is that your friend rolled the distribution into a Traditional IRA. This rollover is not a taxable event.

Subsequently, the Traditional IRA was converted to a Roth IRA. This is a taxable event... the amount transferred is included in gross income, but the accumulation in the Roth IRA can be tax free.

There was a special "deal" for conversions to Roth IRAs made during 1998. The income tax could be spread out over four years. In 1999 and after, income taxes must be paid on the entire amount converted for the year in which the conversion is made.

Hope this helps.