The SECURE 2.0 Act introduces significant changes to Roth 401(k) accounts in 2024, enhancing their benefits and providing more flexibility for retirement planning. Here is a summary of what you need to know:

Elimination of Roth 401(k) RMDs:

Starting this year, required minimum distributions (RMDs) are no longer required for Roth 401(k) accounts. Previously, account holders had to withdraw a certain amount annually beginning at age 73. This change aligns Roth 401(k)s with Roth IRAs, allowing funds to grow tax-free indefinitely and potentially reducing taxable income in retirement.

Employer Matching Contributions:

Employers can now deposit matching contributions directly into employees’ Roth 401(k) accounts. These contributions grow tax-free and can be withdrawn tax-free. However, they will be taxed as income in the year they are made. Not all employers may adopt this option, so check with your employer.

Roth Catch-Up Contributions:

Starting in 2026, high earners (those making over $144,999 annually) will be required to make catch-up contributions on a Roth basis. This means paying taxes on these contributions during higher earning years but benefiting from tax-free withdrawals in retirement.

These changes aim to encourage retirement savings and provide greater flexibility. Review your retirement plans and discuss these updates with a financial or tax advisor to maximize your benefits and ensure a secure financial future.