The Roth 401(k) No Longer Forces Money Out
For years the designated Roth account inside a workplace plan carried an oddity: it was funded with after-tax money and produced tax-free withdrawals, and yet it still forced distributions in retirement, while a Roth IRA holding identical dollars did not. The standard advice was to roll it over before the requirement began. That requirement no longer exists, which quietly retires a piece of near-universal advice.
- The answer:: A Roth 401(k) or Roth 403(b) no longer forces a distribution during your lifetime. The balance can stay invested for as long as you like.
- What it replaced:: The old rule made the reflex rollover to a Roth IRA close to mandatory for anyone who did not want distributions. That reason is gone.
- Reasons still to roll:: A wider investment menu, lower costs, consolidation of several old plans, and access to Roth IRA ordering rules that return contributions first.
- Reasons to stay:: Plan-specific protections, an institutional fund line-up you cannot buy retail, and the fact that a rollover can start a fresh five-year clock if you have no established Roth IRA.
Where the AI summary above gets this wrong
"You should roll your Roth 401(k) into a Roth IRA to avoid required minimum distributions."
That's surface-true. Here's what it misses:
- The requirement it avoids no longer exists — The lifetime RMD on designated Roth accounts has been removed. Advice framed around escaping it is describing a rule that has been repealed, and it was the single most common reason given for the rollover.
- A rollover can start a new five-year clock — If you have never held a Roth IRA, the one opened to receive the rollover begins its own five-year period for qualified distributions. Years of seasoning inside the 401(k) do not transfer, so the move can make a previously qualified balance temporarily unqualified.
- Traditional balances in the same plan still have RMDs — Only the designated Roth portion is exempt. Pre-tax money in the same 401(k) continues to require distributions on the ordinary schedule, so the account is not exempt — a part of it is.
01 What changed, and what it leaves in place
Designated Roth accounts inside workplace plans — the Roth 401(k), Roth 403(b) and Roth 457(b) — no longer carry a required minimum distribution during the owner's lifetime. They now match the Roth IRA, which never had one.
The change removes an anomaly rather than creating a benefit. There was no coherent reason for money that had already been taxed, and would produce tax-free withdrawals, to be forced out of one wrapper and not the other. Its practical effect is that the balance can now be left alone.
Two things it does not change. Pre-tax money in the same plan still requires distributions on the ordinary schedule, so a participant with both kinds is exempt only on the Roth side. And inherited accounts are a separate regime: beneficiaries of a Roth account still face the distribution rules that apply after death, which the repeal does not touch.
Shows: what a Roth balance becomes when no distribution is forced out of it, which is the whole practical value of the rule change. Ignores: inflation, the ten-year window your heirs will face, and whether you need the money.
Source: Retirement plan and IRA required minimum distributions FAQs
02 The rollover is now a decision on its merits
With the forced-distribution reason gone, the case for moving a Roth 401(k) to a Roth IRA rests on ordinary considerations. The investment menu is usually the strongest: a plan offers a fixed list, an IRA offers the market. Consolidating several old employers' accounts into one is the second.
Ordering rules are the third and least discussed. A Roth IRA returns your own contributions before earnings, so the balance is reachable without tax in a way a plan distribution — which comes out pro rata between contributions and earnings — is not.
Against that, some plans offer institutional share classes cheaper than anything available retail, and creditor protections under federal plan law that an IRA relies on state law for. Neither is decisive on its own, and both are worth checking before moving money that no longer has to move.
Source: Publication 590-B, Distributions from Individual Retirement Arrangements
03 The clock a rollover can restart
The trap in the new arrangement is the five-year rule. Qualified distributions from a Roth IRA require five years since 1 January of the tax year of your first contribution to any Roth IRA. That clock belongs to the Roth IRA, and years accumulated inside a Roth 401(k) do not carry across.
Someone who has contributed to a Roth 401(k) for a decade but has never held a Roth IRA, and who opens one to receive a rollover, starts at zero. Money that was fully seasoned in the plan becomes subject to a fresh five-year wait on its earnings.
The defence costs almost nothing: open a Roth IRA and put a small amount in it now, years before any rollover is contemplated. The clock starts on the account's first contribution, not on its balance, so a token deposit today protects a large transfer later.
I like this change because it removes a piece of advice rather than adding one. The old rule generated a rollover that a lot of people did without much thought, and rollovers are where unforced errors live — the withheld 20% on an indirect transfer, the clock nobody checked, the plan protection quietly given up. Now the default is to do nothing, and doing nothing is correct until a specific reason appears. The one thing worth doing eagerly is opening a Roth IRA with a token amount, because the only scarce ingredient in that account is elapsed time.
FAQ
Does a Roth 401(k) still have required minimum distributions?
Not during the owner's lifetime. Designated Roth accounts in workplace plans no longer carry a lifetime RMD, which aligns them with Roth IRAs. Pre-tax balances in the same plan still require distributions on the ordinary schedule.
Should I still roll my Roth 401(k) into a Roth IRA?
It is now a choice rather than a necessity. A wider investment menu, lower costs, consolidation and Roth IRA ordering rules argue for it; institutional pricing, plan-level protections and the five-year clock argue for leaving it where it is.
Can a rollover restart my five-year clock?
It can. The qualified-distribution clock belongs to your Roth IRAs, and time inside a Roth 401(k) does not transfer. If you have never held a Roth IRA, opening one to receive a rollover starts a fresh five-year period — which is why opening one early with a small amount is worth doing.
Sources
Regulator references
- Retirement plan and IRA required minimum distributions FAQs · Internal Revenue Service · 2025Which account types carry a lifetime required distribution and which do not.Last verified: 2026-09-07
- Publication 590-B, Distributions from Individual Retirement Arrangements · Internal Revenue Service · 2025Roth IRA distribution treatment and the absence of a lifetime RMD.Last verified: 2026-09-07
- Topic no. 309, Roth IRA contributions · Internal Revenue Service · 2025The five-year clock a rollover to a Roth IRA interacts with.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.