However, there is one disadvantage to the Roth 401(k) that you should be aware of. Unlike a Roth IRA, a Roth 401(k) is subject to the employer plan rule that Required Minimum Distributions (RMDs) must be taken starting at age 70-1/2. If you were counting on not having to take an RMD from this asset, then you will need to roll your Roth 401(k) assets into a Roth IRA before the year in which you turn 70-1/2.
Like a 401(k) plan, you do not have to take an RMD if you are still employed and contributing to the Roth 401(k) after age 70-1/2. Once you leave that employment, the RMD rules will kick in. If this sounds confusing, be sure to contact one of our financial advisors.