Tax on RMD

[sfowjr66]

In 2022 I retired at age 78 and took my first RMD. The total RMD based on my age and the amount in my 401k plan on 12/31/21 was correctly calculated and included in Box 1, Gross Distribution on the 1099-R form I received from Fidelity.

My 401K consists of three buckets:

1. Pre tax deferrals plus earnings

2. Voluntary after tax deferrals plus earnings

3. Roth contributions and earnings--my 401k plan allowed me to make voluntary after-tax contributions to a Roth bucket that is included in the 401k plan. Of course I paid the tax on the Roth deferrals when they were made.

My understanding is that the total RMD needs to include all components of my 401K. But I also think that in so far as a significant portion of my 401k consists of after-tax deferrals and Roth deferrals (and earnings), that the fraction of the total calculated RMD generated by these after-tax buckets should be deducted from the 1099-R gross distribution so as to not be taxable.  Am I correct?   

Thank you in advance.

[SteamTrain]

Sounds correct...the after-tax proportion should be calculated by Fidelity and give you a lower box 2a value which is the actual taxable amount.  I know they do on mine.  Then the amount that was subtracted to give the box 2a value is also shown in box 5.

But I wouldn't think they would include any ROTH 401k distribution on that same 1099-R...maybe they can..don't know.

@dmertz   ??

[dmertz]

I have no experience with this myself, but I believe that the total RMD can be satisfied with any combination of distributions from the three buckets as long as the designated beneficiaries buckets are the same of all of the bucket. (CFR 1.401(a)(9)-8 Q&A 2)  The taxable amount of any particular distribution would be determined based on the bucket from which the distribution was made.

A Roth 401(k) distribution is coded differently than a distribution from a traditional 401(k) account, so distributions from these two accounts cannot be combined onto a single Form 1099-R.

It's not clear how this might change with the RMD requirement for Roth 401(k) accounts having been eliminated for 2024 and beyond by SECURE 2.0.