Beat the Drums if You Want a Roth - May 8, 2005

[roth401k]

Beat the Drums if You Want a Roth

By Albert B. Crenshaw
Washingtonpost

Sunday, May 8, 2005

Jan. 1 may seem a long way off, but employers and employees looking for ways to get the most out of their retirement benefits should start thinking about it.

That's the date on which "Roth 401(k)" plans become legal, allowing companies to begin offering workers the option of funding a 401(k) account with after-tax dollars, in addition to or instead of their traditional 401(k). Funding a Roth would mean higher taxes now, but no taxes, and no required withdrawals, later on in retirement on the money that's set aside that way.

So far, about a third of employers are planning to offer these accounts, or are at least leaning toward them, according to a survey by Hewitt Associates, a benefits consulting firm based in Lincolnshire, Ill. But experts also say that many have not yet focused on the decision.

"It's a little bit early on, and employers have not spent a lot of time thinking . . . through how appealing it may be to employees," said Lori Lucas of Hewitt. "It may go higher if there is a kind of a grass-roots [demand] from employees."

For employers, the new option entails some administrative headaches -- including such matters as keeping two separate 401(k) accounts for participating employees and getting payrolls adjusted to include and exclude the proper amounts on tax forms.

However..............

ENTIRE ARTICLE - Beat the Drums if You Want a Roth

[Stjohnstom]

I am not sure why a company would not do this. I am wondering if there is any cost or fees that a company would incur by offering this program to its employees. I would think that this would be a great alternative to pensions that are less reliable than winning the lottery.