If I transfer Roth 401(k) funds to a Roth IRA, are they subject to required minimum distributions at 70.5 years old?

If I transfer my Roth 401(k) funds to my Roth IRA account via a trustee-to-trustee transfer when I retire, will the Roth 401(k) funds (once they are in a Roth IRA) be subject to required minimum distributions (RMDs) when I am 70.5 years old?

Retirement, 401(k), IRAs
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January 2018

Hello,

No, you will not be subject to any more RMDs once the money is stashed in the Roth IRA. That’s the beauty of the tax-exempt saving for you.  One step further, even for people who don’t have a Roth 401k, it’s still ideal to gradually convert some of the traditional 401k to Roth IRA several years prior to the retirement because of the possibility of an increased Medicare premium.

Especially considering the current low tax rate post tax reform, it could work in many savers’ favor.  Keep in mind, many of those favorable tax benefits have the sunset date, which means they will expire in 10 years unless Congress acts on it.  Thus, this could be a great time to review all options with your financial planner to make sure you get the most benefits with the least tax bill.  Best!

January 2018
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