Roth 401(k)s offer interest and challenges starting in 2006

[roth401k]

New Roth 401(k)s offer interest and challenges starting in 2006

The 2002 tax law know as EGTRRA included provisions that allowed plan participants to designate some of their salary deferral 401(k) and 403(b) contributions as "Roth contributions" for plan years starting in 2006 or later. When the tax law was first enacted, most pension practitioners saw both the benefits and challenges that would be associated with offering this new provision. Additionally, most in 2002 viewed 2006 as too far off for immediate concern.

Blink an eye and 2006 is less than nine months away, and the appeal, challenges and planning opportunities associated with Roth salary deferral contributions are upon us. ....................

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Jay Thomas Scholz, CPC, is president and co-founder of Scholz, Klein & Friends Enlightened Retirement Group Inc. Scholz can be reached at jay@scholzklein.com or at 210-829-5600.