Roth 401(k)s

A Roth 401(k) combines features of a traditional 401(k) with those of a Roth IRA. As with a traditional 401(k), you would contribute to it through payroll deduction. As with a Roth IRA, contributions are after tax. You may also make withdrawals, free of taxes and penalties, after age 59 1/2.

Are you considering the investment?

* See if your your employer offers a traditional 401(k) and/or a Roth 401(k).
* Research the information on your plan.
* Find out what is necessary in the way of paperwork necessary to begin participating.

You should probably start out with a review of your budget. Determine how much comes in ever month and how much goes out. From here you will be able to determine how much you are able to set aside every month for a contribution.


The Roth 401(k) follows many of the same rules as a traditional 401(k).
There is a maximum annual contribution se on a yearly basis.

Your employer may provide a matching contribution as part of a Roth 401(k) offering. You will be required to accept the matching contribution in a traditional, and not a Roth, account. .

You may continue to maintain a traditional 401(k) even if you are directing new contributions to a Roth 401(k). Your contributions to a Roth 401(k) are irrevocable. They cannot be transferred to a traditional 401(k) account and funds in a traditional 401(k) cannot be switched to a Roth 401(k).

Both Roth and traditional 401(k)s require distributions after age 70 1/2.



If you anticipate being in a higher tax bracket during retirement you may benefit from a Roth 401(k) or 403(b).

If you will not need your retirement assets for living expenses during your later years a Roth 401(k) offers the opportunity to roll over funds directly to a Roth IRA.


Also, keep in mind that the longer you remain invested in a Roth 401(k), the more you are likely to benefit from tax-free growth.

For more information, consult with a professional.