Roth 401(k)/403(b)

[Felicia]

If an employee has a traditional 401(k)/403(b) and a Roth account in the same plan and must take RMDs, does the employee calculate the RMD for each type of account (Traditional and Roth) separately? Can the employee choose to take RMDs only from the Roth account or from the traditional account or is the employee required to take RMDs from the each type of account (traditional account Roth account)?

[John Feldt ERPA CPC QPA]

A Roth IRA has no RMD.

A Roth 403(b) does have RMDs.

"Does the employee determine the RMD for each of these types of accounts separately?"

No. The total balance in your plan is considered.

Can the employee choose to take the RMDs from either the Roth or the Traditional account?

Yes.

or, does the employee need to take RMDs from each type?

You can choose to take it out all from Roth, all from pre-tax, or some of each, depending on how your 403(b) plan document is written. If some of the Roth is withdrawn, and the "basis" still needs to be tracked, then a pro-rata calc is done since it's a 403(b) plan. (In an IRA, the Roth principal would be considered the first amounts withdrawn).

You can get out of some of the RMD requirements from your 403(b): Roll over the Roth 403(b) portion of your account to a Roth IRA, and that Roth IRA will not require RMDs! Be sure to take any needed RMD first.

Be aware that the 5-year Roth clock in the IRA does not get to adopt the 5-year Roth clock from your Roth 403(b) rollover.

So, if you already have a Roth IRA, then your Roth 403(b) rollover gets to use that existing Roth IRA's 5-year clock. If it's a new IRA, then the five-year clock starts anew, so be sure to wait 5 years before taking withdrawals.

Of course the traditional 403(b) portion is still subject to RMD.

Hmmm. This all sounds so familiar...