Answer: Yes to both questions. You have to take required minimum distributions from Roth 401(k)s after age 70½, even though the withdrawals are not taxable. As with any 401(k), though, you may be able to delay taking the required withdrawals if you’re still working for that employer past age 70½ (unless you own 5% or more of the company). You must calculate your RMD for each 401(k) and withdraw the money separately from each account -– see 6 Steps to Cutting Your Taxes When You Start Taking RMDs for details.
But you can avoid taking RMDs from your Roth 401(k) by rolling the money into a Roth IRA after you leave your job. If you wait until age 70½ to do that, you’ll have to take that year’s RMD before rolling over the money to the Roth IRA.
Avoiding RMDs, however, is just one factor to consider when deciding whether to roll over your 401(k). Also consider the costs, investing options and other features. “By rolling to an IRA, one has the most flexibility and control over the investment provider and options, but the 401(k) plan may offer lower-cost institutional pricing on funds or even investment options unique to the plan,” says Maria Bruno, a certified financial planner and senior investment strategist at Vanguard. Also, you may be able to access the 401(k) without penalty if you leave your job after age 55, but you’ll generally have to wait until age 59½ to avoid the penalty for tapping your earnings (but not contributions) in a Roth IRA.
For more information about your rollover decision, see Pros and Cons of Rolling Your 401(k) Into an IRA.
As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.