Roth 401(k)s offer another retirement investment option

[roth401k]

Roth 401(k)s offer another retirement investment option

Angela Maas

Employee Benefit News • April 1, 2005

Most people are familiar with 401(k)s and Roth IRAs. But chances are that many haven't heard of the Roth 401(k), a provision in the Economic Growth and Tax Relief Reconciliation Act of 2001 that takes effect on Jan. 1, 2006.
Section 402A of EGTRRA allows - but does not require - an employer to add a Roth contribution program to its 401(k) or 403(b) plan. Like the Roth IRA, the Roth 401(k) will be funded with an employee's after-tax dollars, and the employee may withdraw the contributions and earnings tax-free with a qualified distribution.

Such accounts may appeal to employees who do not need to shift to a lower tax bracket currently, but want to avoid being taxed on withdrawals during retirement. Employees who want to be in a lower tax bracket, but.......

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