Two SECURE 2.0 provisions affecting Roth 401(k) accounts have been on the books for more than two years, but adoption — by both savers and plan sponsors — remains uneven. Both quietly change long-standing retirement playbooks, and both reward people who notice them early.
Change One: Roth 401(k) Accounts No Longer Have RMDs
Starting with the 2024 tax year, SECURE 2.0 eliminated required minimum distributions from employer-sponsored Roth accounts — Roth 401(k), Roth 403(b), and the Roth portion of governmental 457(b) plans. Before the change, the after-tax Roth balance inside an employer plan was treated like a traditional 401(k) for RMD purposes: distributions had to begin at the applicable RMD age, even though the money was already tax-paid.
That created an awkward planning step. Retirees with sizable Roth 401(k) balances typically rolled them into a Roth IRA before reaching their required beginning date, purely to escape the distribution mandate. The rollover usually worked, but it forced timing decisions, restarted the five-year clock in some cases, and pulled money away from plan-level protections like federal creditor shielding.
That step is no longer necessary. A worker who reaches 73 with a Roth 401(k) balance can leave it in the plan, let it continue compounding tax-free, and pass it to heirs without ever taking a lifetime distribution. For people who prefer their employer plan's institutional fund pricing or stable-value options, that is a meaningful operational simplification.
Change Two: Employer Matches Can Now Land in Roth
SECURE 2.0 also permits employers to deposit matching and nonelective contributions directly into a worker's Roth 401(k) account. Historically, those contributions had to go into a pretax bucket regardless of where the employee's own contributions were directed.
The catch is the tax bill. According to IRS guidance and major plan administrators, Roth-treated employer contributions are taxable to the employee in the year they are made and must appear on the W-2 as additional wages. The contribution itself still grows tax-free, and qualified withdrawals after age 59½ and the five-year rule remain tax-free.
Two practical points matter for anyone weighing the option:
- Vesting must be 100%. Roth treatment is only allowed on fully vested contributions. Employees in a graded vesting schedule cannot elect Roth treatment on a contribution until it vests.
- Estimated taxes may shift. The added W-2 income can push borderline filers into a higher bracket, affect Social Security taxation, or trigger underpayment penalties for those who don't update withholding.
Plan sponsors have been slow to add the feature. A worker whose employer has not yet adopted the Roth match cannot use it, regardless of personal preference — though asking the plan administrator whether it is on the roadmap is a reasonable step.
When These Changes Add Up
The two provisions interact. Workers who shift their employer match to Roth, leave the balance in-plan, and never face an RMD on it can build a fully tax-free retirement bucket that compounds for decades and transfers to heirs under the Roth inheritance rules. The trade-off is paying the tax now, on dollars that would otherwise be deferred.
For higher earners already in peak brackets, the math often favors keeping the match pretax. For mid-career savers in lower brackets, or those expecting future tax rates to rise, the Roth match can be a strong long-term position — assuming the employer offers it and withholding is adjusted to absorb the W-2 impact.
Sources: Kiplinger, Fidelity, Internal Revenue Service, Ameritas, Employee Fiduciary