The Roth 401k Pension Plan/.
A Roth 401k Plan is very similar to a Roth Ira. However, there are some important differences. All employers do not have Roth 401k plans yet as it only became available in 2006. It is possible that those who do not have it yet, will implement it in the coming years. Possibly they could be waiting to see the popularity of this choice before incuring the expense of set up. These accounts function just like your traditional 401k account, but you will receive a form from your employer that will allow you to choose between a traditional 401k plan and a Roth 401k plan. You will be able to funnel all of your contributions to a Roth 401k plan or split your contributions between the Roth 401k and the traditional 401k and your employer will still make the same contribution as they did to your traditional 401k plan, however it will be deposited in a traditional 401k account even though your contribution is going to a Roth 401k account.
The tax rules are still the same as they are for a Roth Ira. The money that you contribute to a traditional 401k plan is deducted from your income before taxes. You pay the income tax on your contributions to a Roth 401k plan in the same year you made the contribution. |