The Roth IRA RMD Exemption

One of the most powerful features of the Roth IRA is its complete exemption from Required Minimum Distributions (RMDs) during the original owner’s lifetime. While Traditional, SEP, and SIMPLE IRAs require you to start withdrawing funds once you reach age 73, the IRS allows Roth IRA assets to remain in the account indefinitely. This provides a significant advantage for long-term wealth preservation, as your investments can continue to grow tax-free for as long as you live, regardless of your age or financial need.

Beginning in 2024 and continuing through the 2026 tax year, the SECURE 2.0 Act has expanded this RMD exemption to include “designated Roth accounts” within workplace plans, such as Roth 401(k) and Roth 403(b) accounts. Previously, these employer-sponsored Roth accounts were subject to the same RMD rules as their Traditional counterparts, often forcing retirees to roll their funds into a Roth IRA to avoid mandatory withdrawals. With this legislative change, the rules are now unified, allowing participants to keep their after-tax savings in their employer plans without the pressure of forced distributions.

The RMD exemption effectively turns the Roth IRA into a premier estate planning tool by allowing the account holder to pass on a tax-free legacy. Since you are not forced to deplete the account, the full balance—including decades of compounded growth—can be left to your heirs. While beneficiaries themselves are generally subject to RMD rules or a “10-year rule” that requires the account to be emptied after the owner’s death, the assets they receive remain tax-free, provided the account met the initial five-year aging requirement.

This lack of mandatory withdrawals also provides Roth IRA owners with unparalleled control over their taxable income during retirement. Because Traditional IRA RMDs are taxed as ordinary income, they can push a retiree into a higher tax bracket or increase the portion of their Social Security benefits that is subject to tax. By contrast, a Roth IRA owner can choose exactly when and how much to withdraw—or choose not to withdraw anything at all—keeping their reported income lower and potentially reducing their overall tax liability and Medicare premiums.

Despite the lifetime exemption, it is important to remember that RMD rules still apply to the tax-deferred portions of your retirement portfolio. If you have a “Side-by-Side” retirement strategy involving both Traditional and Roth accounts, you must still calculate and withdraw the required amount from your Traditional accounts each year starting at age 73. Many investors use their Traditional RMDs to fund their living expenses first, allowing their Roth IRA to remain untouched as a “last resort” asset that benefits from the longest possible period of tax-free growth.

Source: Internal Revenue Service (IRS), Publication 590-B, “Distributions from Individual Retirement Arrangements (IRAs)”; and SECURE 2.0 Act of 2022 (Section 325).