New Roth 401(k) Option Will Be Offered in January- August 30

[roth401k]

New Roth 401(k) Option Will Be Offered in January

AccountingWEB.com

August 30, 2005

Employers can offer a new 401(k) retirement account starting January 1, 2006. The Roth 401(k) merges the traditional 401(k) account with the tax benefits of the Roth IRA. The new Roth 401(k) is funded using after-tax dollars and withdrawals from the account are tax-free while the traditional 401(k) is funded with pre-tax dollars and withdrawals are taxed as income.

The Roth IRA has income eligibility limitations for single filers making more than $110,000 a year and joint filers making more than $160,000 yearly. The Roth 401(k) has no restrictions and as long as an employer offers this retirement account option, anyone may invest for their retirement using this financial vehicle. There are no minimum distribution requirements for the new Roth 401(k) account either.

Selecting between the accounts may require......

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