How and When Will SECURE 2.0 Roth Provisions Affect RMDs?

Q: I heard that, under the SECURE 2.0 Act, Roth amounts can be excluded from required minimum distributions. We had a retired participant who just took her initial 2022 RMD from our 403(b) plan that was due to be taken on April 1. She wanted to know if, since that distribution included her Roth balance, whether the distribution could be reversed and retaken without including the Roth balance in the calculation. Also, since she delayed her distribution until recently, she realizes that she also has to take her 2023 RMD this year and inquired as to whether the Roth amount could be excluded as well. What say the Experts?

Kimberly Boberg, Taylor Costanzo, Kelly Geloneck and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Section 325 of the SECURE 2.0 Act of 2022 states that amounts in a designated Roth account in a plan are not subject to the required minimum distribution rules during a participant’s lifetime. However, this provision is not effective until distributions payable for years after December 31, 2023, including distributions that are required prior to January 1, 2024 but are delayed until January 1, 2024 or later (i.e., for an April 1, 2024, required beginning date). This means that the retired participant must have her Roth balance included in her RMD calculation for 2022 and 2023, because Section 325 is not yet effective.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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