gcaflyer said:
Can someone who really knows explain a Roth 401(k). I thought that by definition a Roth was funded with after tax dollars and grew tax deferred, while a 401(k) was funded with pre-tax dollars. Just a question not trying to stir anything up here.
I asked "MyASA" a few months back and they respond by saying the company plans on offering it to ASA employees. It's basically works like the 401K. But, here's a little article they may help you more.
Proposed Roth 401K Rules
From
Jenny McKinney & Patrick McKinney,
Your Guide to
Retirement Planning.
FREE Newsletter.
Sign Up Now!
According to the IRS, it will implement the Roth 401K provision of EGTRRA. Under this new ruling, employees will be able to designate money in their 401K plan to be Roth contributions. This will allow employees to contribute money that has been taxed into a Roth where contributions and earnings will grow tax free until the participant retires.
Beginning in 2006, 401K plans will be permitted to allow employees to designate their contributions as Roth contributions. These Roth contributions will be subject to the same rules as Roth IRAs. This means the contributions must remain in the plan for 5 years to receive the tax free advantage. According to Martha Priddy Patterson of Deloitte Consulting, under the current law, the Roth provision will sunset at the end of 2010. This means plan participants can never enjoy the Roth benefits unless Congress extends the law. Ms. Patterson is a Contributing Editor to Thompson Publishing Group’s
401K Handbook.
The IRS provisions of the Economic Growth and Taxation Relief Reconciliation Act made the following changes affecting 401K plans:
Catch-up contributions were added to provide for additional elective contributions for participants age 50 and older.
The 401K regulations are to be changed to shorten the period of time that an employee is stopped from making elective contributions under the safe harbor rules for hardship distributions.
Distributions from 401K plans are permitted upon severance from employment rather than separation from service.
Faster vesting is required for matching contributions.