Roth 401(k) provides benefits of established plans and more

[roth401k]

Roth 401(k) provides benefits of established plans and more

Sunday, October 02, 2005
JULIE TRIPP

A new option for retirement savers makes its debut in January, combining attributes of the popular Roth IRA with those of the even more popular 401(k). But it won't help if your employer decides not to offer a version of the Roth 401(k).

So far, only about one-third of employers say they're likely to make the plans available, according to a survey by benefits consultant Hewitt Associates. That means now's the time to bone up on the new plan -- and to lobby your bosses if you think you'd benefit.

"That's the key," says Rick Meigs, president of Portland-based 401kHelpCenter.com. "The Roth 401(k) does no one any good unless employers amend their (retirement) plans to allow it. So now's the time to ask your employers about it. It doesn't take very many voices, sometimes just two or three people."

The new twist, passed by Congress with the tax relief act of 2001 but not effective until 2006, gives retirement savers, in effect, a Roth IRA inside their 401(k) or 403(b) plans.

With traditional IRAs and regular 401(k)s, participants get an upfront tax deduction for contributions -- but later pay the piper as withdrawals get taxed. But Roth IRA participants, and now Roth 401(k) participants.......

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