Solo 401(k) Plan Required Minimum Distribution (RMD) Rules Updated for SECURE Act 2.0

Understanding required minimum distributions, or RMDs, for your Solo 401(k) is essential. That is especially true now that SECURE Act 2.0 has changed when distributions begin and how beneficiaries are treated. RMDs are a critical part of retirement tax planning, and mistakes can lead to serious penalties.

In this article, I will walk you through:

• When you must begin taking RMDs
• How the rules differ for spousal and non-spousal beneficiaries
• How Solo 401(k) RMD rules compare to IRA rules
• Why working with the right expert matters

What Are RMDs and When Do They Start?

An RMD is the minimum amount the IRS requires you to withdraw each year from most tax-deferred retirement accounts once you reach a certain age. The idea is simple. The government gave you tax deferral for years. At some point, it wants that money to become taxable income.

RMD Starting Age Under SECURE Act 2.0

SECURE Act 2.0 made important changes to the RMD age:

• The RMD age increased from 72 to 73 beginning January 1, 2023 for individuals reaching age 72 after 2022.
• The RMD age will increase again to 75 in 2033.

Your first RMD must generally be taken by April 1 of the year following the year you reach your applicable RMD age.

After that, each annual RMD must be taken by December 31.

Timing matters here. Delaying your first RMD until April 1 could mean taking two distributions in the same tax year, which may increase your taxable income.

Does a Solo 401(k) Have RMDs?

Yes. Like any other 401(k) plan, a Solo 401(k) is subject to RMD rules once the owner reaches the applicable age.

This applies to pre-tax funds. But there is a major change when it comes to Roth accounts.

RMDs for Roth Solo 401(k) Plans

One of the most important SECURE Act 2.0 updates involves Roth Solo 401(k) accounts.

Roth Solo 401(k) accounts are no longer subject to RMDs during the participant’s lifetime. Beginning in 2024, designated Roth accounts in employer plans are treated the same as Roth IRAs for RMD purposes.

Why this matters is simple. In the past, Roth 401(k) plans required RMDs even though Roth IRAs did not. That inconsistency created unnecessary planning issues. That difference is now gone. For Roth Solo 401(k) holders, this is a major planning win.

Solo 401(k) RMDs vs. IRA RMDs

Here is a side-by-side comparison:

RMD Required (Pre-Tax)
Solo 401(k): Yes
Traditional IRA: Yes

RMD Required (Roth Account)
Solo 401(k): No under SECURE Act 2.0
Roth IRA: No

Still Working Exception
Solo 401(k): Typically no for the owner
IRA: Not applicable

First RMD Age
Solo 401(k): Age 73, gradually increasing to 75
Traditional IRA: Age 73, gradually increasing to 75

One key difference involves the still-working exception. Some large employer 401(k) plans allow employees to delay RMDs if they are still working. That exception generally doesn’t apply to Solo 401(k) plans because the owner is both the employer and the participant. As a result, many Solo 401(k) owners must begin RMDs even if they are still actively working.

Spousal Beneficiaries: RMD Options After the Owner’s Death

If a spouse inherits a Solo 401(k), they have significantly more flexibility than a non-spouse beneficiary.

Spousal RMD Rules

A surviving spouse may:

Treat the account as their own
They can delay RMDs until they reach their own RMD age and base future RMDs on their life expectancy.

Remain a beneficiary and take inherited distributions
Under SECURE Act 2.0, a surviving spouse can elect to use the Uniform Lifetime Table, based on their age, to calculate RMDs rather than the more restrictive Single Life Expectancy Table. This can reduce the required annual distribution amount.

Roll the account into their own IRA or Solo 401(k)
If eligible, this can simplify long-term RMD planning and provide greater control.

The key takeaway is that spouses are not subject to the 10-year rule that applies to most non-spousal beneficiaries. That creates valuable planning flexibility.

Non-Spousal Beneficiaries: Inherited RMD Rules

For non-spouse beneficiaries such as adult children, siblings, or certain trusts, the rules are more restrictive.

SECURE Act 2.0 Framework

After the death of a Solo 401(k) owner:

• Most non-spouse beneficiaries must withdraw the entire account by the end of the 10th calendar year following the year of death. This is known as the 10-year rule.

Under final IRS guidance, if the original account holder had already begun taking RMDs, most beneficiaries must also take annual RMDs during the 10-year period. They cannot simply wait until year 10 and withdraw everything at once.

Eligible Designated Beneficiaries

There are exceptions. Certain beneficiaries may still use life expectancy based annual distributions instead of the 10-year rule. These include:

• Minor children, until reaching the age of majority
• Disabled individuals
• Chronically ill individuals
• Beneficiaries not more than 10 years younger than the decedent

These exceptions align with the rules that apply to other qualified retirement plans.

Avoiding Penalties

Failing to take your RMD can result in a significant penalty. SECURE Act 2.0 reduced the penalty structure, but it’s still substantial:

• The penalty was reduced from 50 percent to 25 percent of the amount not withdrawn.
• It can be reduced further to 10 percent if corrected in a timely manner under certain IRS procedures.

Even with the reduction, the cost of getting it wrong is high. Accurate calculation and timely distribution are critical. Solo 401(k) owners don’t have a large corporate plan administrator handling compliance. The responsibility ultimately falls on you.

Why IRA Financial: Solo 401(k) Experts

Calculating RMDs, understanding beneficiary elections, and staying compliant with SECURE Act 2.0 is not always straightforward. This is where experience makes all the difference.

IRA Financial is not just another retirement plan provider. We have been at the forefront of the Solo 401(k) space for years.

Founded by Adam Bergman, Esq., a tax attorney, CPA, and nationally recognized authority on retirement plans, IRA Financial has literally written the book on Solo 401(k) strategies and compliance. I have worked with our in-house team to help thousands of Solo 401(k) owners understand and properly satisfy complex distribution rules with confidence.

The IRA Financial Compliance Shield™

RMDs are one of the most common compliance challenges for Solo 401(k) owners. That is why we developed the IRA Financial Compliance Shield™.

Our Compliance Shield™ provides:

• Proactive reminders of RMD deadlines
• Guidance on spousal elections and beneficiary options
• Expert RMD calculation support
• Ongoing updates regarding SECURE Act and IRS changes
• Live access to retirement tax specialists

With the Compliance Shield™, you eliminate guesswork and significantly reduce the risk of costly penalties.

Final Takeaway

The Solo 401(k) remains one of the most powerful retirement savings tools available to business owners. With that power comes complexity. SECURE Act 2.0 modernized the rules, changed the RMD age, eliminated lifetime RMDs for Roth Solo 401(k) accounts, and clarified beneficiary distribution requirements.

Understanding how these rules apply to you is essential to protecting and preserving your retirement wealth.

If you want guidance navigating RMDs, maximizing flexibility, and minimizing tax and compliance risk, IRA Financial is here to help you every step of the way.