This week, I’m talking about the Roth. Roth 401ks and Roth IRAs are one of the most googled topics on retirement. 

What’s interesting, though, is that in practice, I find that not enough people take advantage of the Roth. So the aim of this week’s tips is to help you better understand why the Roth is a compelling choice, especially in those last few years as you approach retirement. 

As we wind down the week, I want to pass on a little quirk about Roth 401ks specifically that you’ll want to be mindful of, especially in retirement. 

Part of the majestic beauty of the Roth is that there are no required minimum distributions when you turn 70 ½. When you turn 70 ½, you must start withdrawing money from your Traditional IRA and 401k accounts, which is kind of a drag, since these withdraws are included in your income and you’ll pay tax on those withdrawals. 

However, the fact that that there are no required minimum distributions or RMDs mandated from Roth accounts is only partially true. 

While Roth IRAs don’t have forced withdrawals at age 70 ½, Roth 401ks do have those required minimum distributions. 

So the takeaway here is that you’ll most likely want to rollover your Roth 401k into a Roth IRA before those required minimum distributions begin at age 70 ½, so you allow the value of the Roth to continue to grow, without being hamstrung by annual withdrawals. 

That’s it for today. Thanks for listening. Tomorrow, we’re going to recap the week and I’m going to give you a little preview of next week’s theme. 

My name is Ashley Micciche and this is the One Minute Retirement Tip.

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