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 .
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