Coming January 2006 - Your 401(k) With a Roth Twist

[roth401k]

Coming January 2006 - Your 401(k) With a Roth Twist
July 18, 2005

By Elaine E. Bedel, President, Bedel Financial Consulting

Beginning in January 2006, you can make Roth-like contributions to your 401(k). You will need to decide whether pre-tax contributions today or future tax-free distributions are best for you.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) created the Roth IRA. In addition, it included provisions that become effective January 2006 that allow all or a portion of your 401(k) contributions to be treated like Roth contributions.

Employer Must Amend Plan

In order for you to take advantage of this new provision, your employer must amend the 401(k) plan to allow the Roth contributions. In addition, the plan will be required to keep any funds contributed to the Roth portion separate from the traditional 401(k) contributions. The cost to add the Roth provision to the plan and the expense of separate accounting for the contributions may...........

ENTIRE ARTICLE HERE

Elaine E. Bedel, CFP®, is president of Bedel Financial Consulting, Inc., a fee-only financial planning and investment management firm. For more information visit their website at www.BedelFinancial.com or email to ebedel@bedelfinancial.com.