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Roth 401k |
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ROTH 401k Retirement Plan coming in 2006
The new Roth 401k allows employees to contribute after-tax dollars to a 401k account. The new “Roth” 401k plan combines features of a traditional Roth IRA account with those of regular 401k account. Roth 401k account contributions must be made with after-tax dollars. They grow tax-free and withdrawals won’t be subject to income tax. At retirement or employment they can be rolled over into a Roth IRA account.
Key Facts about the new Roth 401k:
Taxes: Roth 401k accounts are funded with after-tax dollars. Withdrawals can be made tax free after the age of 59˝ if the account has been held for at least 5 years.
Contribution Limits: $15,000 for regular employees and $20,000 for employees over the age of 50.
Accounts: Roth 401k funds and regular 401k funds will be held in separate accounts. Employees have a choice on how to distribute contributions between these two types of accounts. Vanguard and Fidelity as well as many other fund companies are expected to offer Roth 401k plan management services.
Matching Contributions: Employer matching contributions are pre-tax and will continue to go into a regular 401k accounts.
Eligibility: All employees who qualify for a traditional 401k account are also eligible for a Roth 401k account. There are no income limitations.
Roll-over: At retirement or employment termination Roth 401k funds can be rolled over into a Roth IRA account
Learn more about the new Roth 401k:
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