Roths will be available in work 401(k)s - July 11, 2005

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Roths will be available in work 401(k)s
July 11, 2005

We've got tips on figuring out if after-tax option is good for you

AMY BALDWIN
Staff Writer

If you're thinking of making a change to your retirement plan, be advised that there's a new option on the horizon.

And it will combine two already-popular investment vehicles: the employer-sponsored 401(k) and the Roth individual retirement account.

It's the Roth 401(k), which companies will be able to offer employees beginning Jan. 1. You might want to get started thinking about whether the Roth 401(k) makes sense for you, because there are several factors to consider.

The Roth 401(k), created by the Economic Growth and Tax Reconciliation Act of 2001, will be a lot like the Roth individual retirement account in terms of contributions and withdrawals. Employee contributions will be made on an after-tax basis. Withdrawals at retirement are tax-free.

With traditional 401(k) accounts, contributions are made pre-tax and you pay taxes when you take out funds as a retiree and are presumably in a lower tax bracket.

While employers won't be required to offer the new Roth 401(k) accounts, most probably will in the first year and almost all of them within a few years, predicted Brad Gilliam, chief marketing officer at RolloverSystems, a Charlotte-based company that provides 401(k) rollover products and services for financial institutions.

"My guess is all the..........

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