Companies can now offer a Roth 401(k) option - Jan 3, 2006

[roth401k]

Companies can now offer a Roth 401(k) option

By MICHAEL S. STACHOWSKI
January 3, 2006

Managing your investments and allocating your 401(k) among various funds may already be a pain in the neck. But the task of managing your company retirement plan may get even more complicated.

As of Jan. 1, companies are able to offer the new Roth 401(k) plan in addition to the traditional 401(k) plan.
In the Roth 401(k) option, contributions are taxed (after-tax dollars) going into the plan. The tradeoff for taking the tax hit sooner rather than later is that you will be able to have qualified distributions (withdrawals) from your contributions and any earnings would be tax-free. The Roth 401(k) contributions are simply another option for employees. They are just like traditional salary deferrals for the purpose of calculating a company match and compliance testing.

The Roth 401(k) is the total opposite of the....

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