New type of Roth accounts - San Fransisco Chronicle

[roth401k]

New type of Roth accounts

The U.S. Treasury on Wednesday proposed rules for a new type of retirement account employers may begin offering next year -- the Roth 401(k).

The account combines features of Roth IRAs with features of 401(k) plans. Employers can offer the new accounts as an option in their regular 401(k).

Contributions to a Roth 401(k) will be made with after-tax dollars, so initially they won't reduce a worker's tax bill.

However, the money will grow tax-free, and all withdrawals after age 59 1/2 will be tax-free. In these respects, they are like self-directed Roth IRAs.

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