The Roth 401k is particularly attractive to higher-earnings individuals, or those that would mostly likely be phased out of IRA contributions. Unlike the $5,000 max in the IRA, an employee could defer the full $15,500 for 2007, or $20,500 if they are over age 50. The Roth 401k works much like the Roth IRA, in that contributions are made with after-tax dollars and withdrawals are tax-free. Unfortunately, not all employers offer this new plan. The roth 401k, quite frankly, is a dream come true in my opinion. Ok so thats a little exaggeration but it truely is the best of both worlds - 401k and Roth IRA.



The Roth 401k accounts are first and foremost a 401k. Most of the same rules apply, including the early withdrawal penalty on all distribution recorded as "income". The Roth 401K contribution limit will be $15,000 in 2006. Note that the limit applies to the combimed contributions to the regular 401K and the Roth 401K; for example, a person could not contribute $15,000 to a Roth 401K and $15,000 to a regular 401K in the same year. The Roth 401k was adopted by 14% of Vanguard plans, and 5% of participants within these plans elected the option. Early Roth adopters included new plan enrollees, high savers, Web-registered participants, and high-income households.

The roth 401k bonus election with trap worked. The roth 401k bonus election in Chinese were doubtless an advantage is with the remarkably low weight of 500 lbs. The Roth 401k works inverse with the above idea. The money you earn this year is taxed this year. The Roth 401k is not always as good a deal as you've stated. For example, my marginal tax rate is 28%.

The Roth 401k plans are relatively new and many people haven't heard of them yet. Employers are slowly starting to offer them to employees. The Roth 401k was set to expire in 2010 unless congress renewed it. A lot of employers were reluctant to offer the Roth 401k because of its status. The Roth 401k plan is a post tax contribution where qualified distributions are tax free. The Roth does not allow deductible contributions.

The Roth 401k is a combination of the Roth IRA and the traditional 401k. It is a company-sponsored retirement plan, but it invests after-tax dollars to a retirement account. The Roth 401k minimum distribution rules are also similar to 401k withdrawals - meaning you need to start to take distributions when you reach age 70 1/2. The Roth 401K is a great plan too, and ALL employers SHOULD be offering it. Certainly if your employer is not offering this option, petition them to do so.