WDIK Posted March 30, 2006 Posted March 30, 2006 Just looking for the comfort that comes from a collaborative consensus. Under final regulations, designated Roth contributions are subject to the rules of section 401(a)(9)(A) and (B) in the same manner as pre-tax elective contributions. MRDs based on Roth deferrals are non-taxable. Am I missing something? ...but then again, What Do I Know?
Guest mjb Posted March 30, 2006 Posted March 30, 2006 They are still subject to to 50% excise tax for failure to take mrds similar to mrds for non spouse beneficaries under a Roth IRA. But the Roth 401k can be rolled over to a Roth IRA to avoid having to take MRDs before the deathof the employee and spouse.
WDIK Posted March 30, 2006 Author Posted March 30, 2006 Sure, but just suppossing you have an actively employed 70-1/2 year old that wants to continue making Roth deferrals for several years.... ...but then again, What Do I Know?
Guest mjb Posted March 30, 2006 Posted March 30, 2006 What are you saying? -MRDs would be deferred until the later of age 70 1/2 or termination like any other distribution under the (a)(9) rules.
WDIK Posted March 30, 2006 Author Posted March 30, 2006 I guess what I'm saying is that the MRDs are non-taxable, so what was the point of making Roth deferrals subject to 401(a)(9). ...but then again, What Do I Know?
Guest mjb Posted March 30, 2006 Posted March 30, 2006 Because it would be too complicated for plan admin and lead to tax manipulation if Roths 401ks were exempt from MRDs.(maybe congress saw a revenue opportunity from participants who would think they dont have to commenece mrds). Besides the Roth could always be rolled over to a Roth IRA.
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