QUESTION: Are Roth solo 401k plans subejct to RMDs?
ANSWER:
In short, no. Starting in 204 Section 325 of the SECURE Act 2.0 states that required minimum distributions (RMDs) will no longer apply to the Roth portion of the 401k including a solo 401k. This new rule is welcomed by Roth 401k holders including Roth solo 401k holders as they now won’t need to transfer their Roth solo 401k funds to a Roth IRA to indirectly avoid taking RMDs from their Roth Solo 401k since Roth IRAs are also not subject to pre-death RMDs. It is important to note, however, that these new rules don’t apply to post death Roth solo 401k required distributions (beneficiary distributions) as those are still subject to the 401k beneficiary distribution rules.
Not having to take RMDs from Roth Solo 401k plans results in a longer period of time for the Roth solo 401k funds to continue compounding tax free.
