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  • SECURE ACT strange provision

    From MZB@21:1/5 to All on Thu Jan 5 11:36:55 2023
    I noticed this:


    ...starting in 2024, RMDs will no longer be required from Roth accounts affiliated with employer retirement plans, e.g. Roth 401ks.


    I never heard of a Roth 401K and how could it be a Roth if they required
    an RMD? (Maybe it was required but one didn't pay tax on it?).

    I'm sure I'm missing something.


    Mel

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
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  • From Tempuser@21:1/5 to MZB on Thu Jan 5 14:54:52 2023
    On 1/5/23 8:36 AM, MZB wrote:

    I noticed this:


    ...starting in 2024, RMDs will no longer be required from Roth accounts affiliated with employer retirement plans, e.g. Roth 401ks.


    I never heard of a Roth 401K and how could it be a Roth if they required
    an RMD? (Maybe it was required but one didn't pay tax on it?).

    I'm sure I'm missing something.


    Mel

    Prior to Secure 2.0 Employer based Roth 401K accounts required RMDs just
    like an employer 401K. This led to a plan to rollover the Roth 401K to
    a Roth IRA at retirement to avoid having to take RMDs. But, one had to
    be careful because the tax-free distributions of earnings required that
    the Roth be in existence for at least 5 years.

    Secure 2 fixes these "issues" by making the Roth 401K look like a Roth
    IRA for the purpose of RMDs starting in 2024.
    --
    Alan
    https://taxtopics.net

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

    --- SoupGate-Win32 v1.05
    * Origin: fsxNet Usenet Gateway (21:1/5)
  • From Roger Fitzsimmons@21:1/5 to Alan on Tue Jan 24 15:58:35 2023
    On Thursday, January 5, 2023 at 2:55:34 PM UTC-5, Alan wrote:
    On 1/5/23 8:36 AM, MZB wrote:

    I noticed this:


    ...starting in 2024, RMDs will no longer be required from Roth accounts affiliated with employer retirement plans, e.g. Roth 401ks.


    I never heard of a Roth 401K and how could it be a Roth if they required
    an RMD? (Maybe it was required but one didn't pay tax on it?).

    I'm sure I'm missing something.


    Mel

    Prior to Secure 2.0 Employer based Roth 401K accounts required RMDs just
    like an employer 401K. This led to a plan to rollover the Roth 401K to
    a Roth IRA at retirement to avoid having to take RMDs. But, one had to
    be careful because the tax-free distributions of earnings required that
    the Roth be in existence for at least 5 years.

    Secure 2 fixes these "issues" by making the Roth 401K look like a Roth
    IRA for the purpose of RMDs starting in 2024.
    --
    Alan
    https://taxtopics.net

    Roth 401k's have been permitted for quite a while. However, not all plans allow them. I can't say for sure what the proporation is, but in my personal experience it's less than 50%.

    I haven't worried about it but I've always assumed you could dodge the RMD's by rolling the Roth 401k into a Roth IRA. Most people with a Roth 401k are no longer contributing by the time RMDs start, and even if they aren't, most plans permit in-service
    withdrawals if you're in that old an age bracket.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

    --- SoupGate-Win32 v1.05
    * Origin: fsxNet Usenet Gateway (21:1/5)