In today’s vlog, I will be discussing the SECURE Act 2.0: eliminate Required Minimum Distributions (RMD) for Roth accounts within employer retirement plans such as 401(k) and 403(b). This is our fourth vlog about the changes within the SECURE Act 2.0 which became a law in December 2022. If you are curious about the changes regarding RMD, 529 plan rollover to Roth IRA, and expanded Roth contributions you can check them out on our website. For this vlog, I will focus on the change of “Eliminate RMDs for Roth Accounts within Employer Retirement Plans”.
Before this SECURE Act 2.0 is passed, those who have retirement plan Roth accounts such as 401(k) and 403(b) with their employer were required to take RMDs like the owners of employer retirement plan Traditional accounts do. When you reach your age for RMD, you would have to take a specific amount out of your Roth account. Now, after the SECURE Act 2.0 is passed, the RMD obligation is eliminated for those who have employer retirement plan Roth accounts. To be clear, this change does not take effect until 2024. For this year, 2023, owners of retirement plan Roth accounts are still required to take out RMD but this would be the last year. This change eliminates a huge difference between Roth IRAs and employer retirement plan Roth accounts because Roth IRA owners were not required to take RMDs during their lifetimes. This difference does not exist anymore since the SECURE Act 2.0 became a law.
If you are curious about how RMD works and how this change impacts your retirement planning, please feel free to contact us anytime.