Starting in 2024, SECURE Act 2.0 eliminated required minimum distributions (RMDs) from Roth 401(k) accounts, fundamentally changing retirement planning for millions of Americans. This game-changing rule now makes Roth 401(k)s equal to Roth IRAs when it comes to required distributions—meaning you'll never have to take money out if you don't want to.
Why This Creates a Massive Opportunity
Before this change, Roth 401(k) owners faced mandatory withdrawals starting at age 73, just like traditional 401(k)s. The only way around this was rolling over to a Roth IRA. Now, you can keep your entire balance growing tax-free indefinitely.
The numbers are compelling for high earners. In 2026, you can contribute up to $23,500 to a Roth 401(k) (plus $7,500 in catch-up contributions if you're 50 or older). Compare this to Roth IRA limits of just $7,000 ($8,000 with catch-up), and you're talking about building substantial tax-free wealth.
For Maryland retirees and others in high-tax states, this creates an especially powerful strategy. You're essentially creating a tax-free inheritance vehicle that can pass to heirs without the complications of RMDs eating into the principal.
The Estate Planning Game-Changer
High earners who were previously limited by Roth IRA income restrictions now have a clear path to build multi-million-dollar tax-free estates. Unlike Roth IRA conversions, which require paying taxes upfront on converted amounts, Roth 401(k) contributions use after-tax dollars you're earning today.
Your beneficiaries will inherit this money completely tax-free, and under current rules, they have up to 10 years to withdraw it all. But during those 10 years, the money continues growing without any tax burden.
Key advantages over traditional retirement accounts:
- No RMDs during your lifetime
- Tax-free growth forever
- No income limits for contributions
- Better creditor protection than IRAs in most states
- Simplified estate planning with no rollover requirements
This rule change makes retirement planning more complex but also more rewarding for those who understand it. If you want personalized guidance on whether this strategy fits your situation, consider taking our Retire Ready Score for tailored recommendations.