MMC Benefits Handbook
Taxes on Required Minimum Distributions
An RMD is not an eligible rollover distribution. Federal income tax will be withheld as if the distribution was a payment of wages to you and you were married claiming three withholding allowances unless you make a different withholding election.
If you elect not to have withholdings apply, you are still liable for any Federal income taxes due on the taxable portion of your distribution, and you could incur penalties if your withholding or estimated tax payments for the year are not enough.
Special Rule for Roth Account Balances: If you are a participant, effective beginning with the 2024 calendar year, your Roth account balances (Roth 401(k), Roth catchup, in plan Roth conversion and Roth rollover contributions, including earnings) are not subject to IRS RMD rules. However, under Plan terms, all amounts held in your accounts under the Plan, including Roth account balances, must still begin to be distributed no later than the applicable RMD dates described in "Required Minimum Distribution" section and in the forms required by the Plan's general distribution rules.
As a result, while RMDs of non-Roth contribution types (such as pre-tax contributions and Company contributions) are ineligible to be rolled over to an IRA or other employer's tax-qualified plan, the required distributions of Roth account balances for 2024 and later years (not including 2023 required minimum distributions required to be paid by April 1, 2024) are generally eligible to be rolled over by the participant. Therefore, if you are a participant, these required Roth account distribution amounts (including earnings) can generally be rolled over into your own Roth IRA or into another employer's tax-qualified plan that allows Roth 401(k) rollovers.
If the required distribution of your Roth account balances is not a "qualified distribution" and is not directly rolled over into another employer's tax-qualified plan or into your own Roth IRA, earnings attributed to your Roth account contributions are subject to mandatory 20% Federal income tax withholding. Furthermore, distributions made before age 59-1/2 may trigger an additional 10% Federal early withdrawal tax on those earnings. Please consult your tax advisor for further details. The special Roth account required distribution rule described in this section applies only to Plan participants, not beneficiaries.