Roth 401k RMD Laws and Updates Explained

The Roth 401(k) RMD laws and updates can be confusing, but don't worry, I've got you covered. As of 2023, the SECURE 2.0 Act of 2022 requires RMDs to begin at age 73, up from age 72.

You may have heard that Roth 401(k) accounts are not subject to RMDs, but that's not entirely true. According to the IRS, Roth 401(k) accounts are subject to RMDs, just like traditional 401(k) accounts.

If you're 72 or older and have a Roth 401(k) account, you'll need to take RMDs by December 31st of each year. This applies to both traditional and Roth 401(k) accounts.

Roth 401(k) dollars are no longer subject to required minimum distributions (RMDs) starting with RMDs for 2024.

The SECURE 2.0 law clarified the rules in the IRS RMD final regulations, which were released on July 18.

Many people won't be affected by this change while they're still working because they can use the "still-working exception" to defer RMDs until retirement.

Those who own more than 5% of the company where they work or their plan doesn't offer the exception will be affected once RMDs kick in – generally in the year they turn 73.

Roth plan accounts can be disregarded when calculating RMDs, but this only applies if you have both pre-tax and Roth accounts in your plan.

If you retire on or after 2024 and want to roll over your 401(k) to an IRA, you must pay your RMD for the year of retirement before any funds can go to the IRA.

The prior-year 12/31 value of your Roth accounts can be disregarded when calculating your year-of-retirement RMD.

A withdrawal from a Roth 401(k) account in a year an RMD is required does not count towards satisfying your RMD for that year.

This is because Roth dollars are after-tax, and plan RMDs can only be satisfied with distributions from the taxable portion of your plan.

Starting in 2024, Roth 401(k) accounts are no longer subject to required minimum distributions (RMDs).

This change affects investors in employer retirement plans, including Roth 401(k) accounts, who will no longer have to take RMDs.

Roth 401(k) accounts can be disregarded when calculating RMDs, just like Roth IRAs, which have always been exempt from lifetime RMDs.

Many people won't be affected by this change while they're still working because they can use the "still-working exception" to defer RMDs until retirement.

Those who can't use this exception will be affected once RMDs kick in, generally in the year they turn 73.

If you have a Roth plan account and retire on or after 2024 in a year when RMDs are due, you'll need to pay your RMD before rolling over your 401(k) to an IRA.

The prior-year 12/31 value of your Roth accounts can be disregarded when calculating your year-of-retirement RMD.

A withdrawal from a Roth 401(k) account in a year when an RMD is required does not count towards satisfying your RMD for that year, since Roth dollars are after-tax.