401(k) Plan Participants May Have More Options in 2006

[roth401k]

401(k) Plan Participants May Have More Options in 2006

The new Roth plan could benefit more workers.

By Giselle Abramovich, Money Management Executive

September 22, 2005- What's good for an IRA is good for a 401(k). That was the thinking behind the new Roth 401(k) that takes effect on Jan. 1, 2006. On March 2, the Internal Revenue Service's treasury division issued a proposal to expand the 401(k) retirement plan by adding a Roth feature. Soon, 401(k) Roth contributions will be under the same rules as Roth IRAs, meaning the contributions will be expected to remain in the plan for five years to receive the tax-free advantage.
Whether an individual should choose a Roth 401(k) or stick to a conventional 401(k) depends on two things: an individual's income tax rate in retirement, and whether an individual can afford more than $15,000 in pre-tax 401(k) contributions.

According to a survey.....

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