Roth 401(k) Accounts No Longer Require RMDs -- What That Changes for Your Strategy

There was a time when Roth 401(k)s were not so easy to find. But these days, many employer-sponsored 401(k) plans offer a Roth savings feature. Not only that, but Roth 401(k)s are a lot more appealing now than they once were.

It used to be that Roth 401(k)s forced savers to take required minimum distributions, or RMDs. But that's no longer the case. Now, Roth 401(k)s offer higher earners in particular a world of options.

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The upside of losing the RMD requirement

For years, Roth IRAs were the only type of tax-advantaged retirement account to not force savers to take RMDs. But thanks to the SECURE 2.0 Act, a couple of years ago, Roth 401(k)s stopped requiring RMDs, too.

That, frankly, is a game-changer for many savers -- particularly higher earners.

Roth IRAs present two issues for higher earners. First, they have much lower contribution limits than 401(k) plans. Second, higher earners are barred from contributing directly.

Roth 401(k)s solve both of these problems. Not only are the annual contribution limits much higher, but there are no income limits associated with Roth 401(k) eligibility.

In fact, thanks to a new rule taking effect in 2026, workers 50 and older with an income of over $150,000 must make their catch-up contributions in a Roth 401(k). They're no longer allowed to make catch-ups in a traditional 401(k).

So all told, right now, Roth 401(k)s really are an optimal savings solution for higher earners. With the RMD requirement gone, they offer all the benefits of Roth IRAs -- and much more.

A savings option worth taking advantage of

If you're a higher earner, you may be in a pretty high tax bracket. So you might assume that it's not worth funding a Roth 401(k), because you lose the up-front tax break on contributions.

But if you expect to contribute generously to a retirement account each year, over time, that balance could grow significantly. With a Roth 401(k), any gains in your account are yours to enjoy completely tax-free.

While you might assume you'll be in a lower tax bracket in retirement than you are now, that's not a given. A Roth 401(k) gives you the freedom to take tax-free withdrawals later in life, and it means you don't have to worry about tax rates changing for the worse.

All told, eliminating the RMD requirement is quite possibly the best change Roth 401(k)s have ever undergone. That's something worth taking advantage of, especially if you're someone who earns a higher paycheck.

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