COLLECTED WISDOM™ on Roth 401k Issues

To Roth or Not? -- That Is the Question - Summary: Do regular 401k and IRA accounts offer greater tax benefits than Roth 401ks and Roth IRAs? It is a tough question, but this paper attempts to study the relative merits of regular and Roth retirement accounts. Located at: Boston University , February 2008. Click on headline for full article.

Final Roth 401k Regulations Released - Summary: Employers should ensure their trustees and third-party administrators comply with the final Roth 401k distribution, rollover and taxation rules. Located at: McDermott Will & Emery, June 2007. Click on headline for full article.

Improperly Excluded Employees from Designated Roth Contributions - Summary: There is a new methodology under the EPCRS for correcting the defect of improperly excluding employees from a 401k and/or (m) arrangement. The new guidance, contained in Revenue Procedure 2006-27 is helpful and addresses obvious inequities under the prior guidance. However, noticeably absent from the discussion of this topic in the Rev. Proc. is guidance on how to correct the improper exclusion of employees from designated Roth contributions. Located at: Reish Luftman Reicher & Cohen, May 2007. Click on headline for full article.

Roth 401k Adoptions Growing - Summary: Approximately 14% of Vanguard's retirement savings plans adopted Roth 401k provisions by the end of 2006. By the end of 2007, Vanguard expects that figure to double. Small plans were more likely to adopt a Roth 401k feature than were large plans. Located at: CCH, May 2007. Click on headline for full article.

Roth 401k Accounts Offer Retirement Saving Flexibility - Summary: Plan sponsors can now offer employees additional retirement saving flexibility. Learn the details behind the IRS regulations permitting companies to allow employees to make Roth contributions to their 401k plans on an after-tax basis. Located at: Hewitt Associates, May 2007. Click on headline for full article.

Roth 401k Survey 2007 - Summary: According to this newly released Roth 401k survey, 22 percent of 401k plans surveyed offer Roth designated accounts. Among companies not currently offering the Roth 401k, 69 percent indicated that EGTRRA permanency has increased the likelihood that they will adopt Roth in the future. Located at: Profit Sharing/401k Council of America , February 2007. Click on headline for full article.

How Valuable is the New Roth 401k Option? - Summary: This article reviews several advantages to the Roth 401k, including the fact that a $15,000 Roth contribution can have the same tax sheltering power as a much higher contribution made through a traditional 401k. The Roth is even more valuable if there is a risk of higher taxes on distributions. Located at: 401khelpcenter.com, May 2006. Click on headline for full article.

IRS Notice 2006-44: Sample Amendment for Roth Elective Deferrals - Summary: This notice provides a sample plan amendment for sponsors, practitioners, and plan sponsors who want to provide for designated Roth contributions in their § 401k plans. Located at: Benefitslink.com , April 2006. Click on headline for full article.

Comparison of Roth 401k, Roth IRA, and Traditional 401k Retirement Plans - Summary: Beginning January 1, 2006, employers have a new retirement savings option to offer employees. The plan, commonly referred to as a "Roth 401k," is a hybrid that combines features of Roth IRA and traditional 401k plans but differs in important aspects. This article and chart deals with some of the differences and similarities. Located at: 401khelpcenter.com, February 2006. Click on headline for full article.

Additional IRS Proposed Regulations for Designated Roth 401k Accounts - Summary: These proposed regulations provide guidance on the taxation of distributions from designated Roth accounts and other related issues. A designated Roth account is a separate account under a 401k plan or 403b plan to which designated Roth contributions are made, and for which separate accounting of contributions, gains, and losses are maintained. Located at: Benefitslink.com , January 2006. Click on headline for full article.

Roth 401k Information - Summary: Participants may be able to avoid paying tax on the investment income. This is a good Q&A on the Roth. Located at: Malvern Benefits Corporation, January 2006. Click on headline for full article.

IRS Issues Final Roth 401k Regulations - Summary: With only hours to spare before plans were able to commence allowing Roth deferrals, the IRS issued the final regulations on the Roth 401k option. Unfortunately, the regulations do not include guidance on the more pressing issues of distributions and taxation. Located at: Sungard/Corbell, January 2006. Click on headline for full article.

Treasury and IRS Issue Roth 401k Final Regulations - Summary: The Treasury Department and the IRS issued final regulations under § 401k and 401(m) on December 30, 2005 relating to designated Roth contributions. Those employers and plan service providers who sat on the fence awaiting these regulations may be surprised at the outcome. Located at: ERISA Expertise LLC, January 2006. Click on headline for full article.

Final Regs on Designated Roth Contributions to a 401k Plan - Summary: This document contains amendments to the regulations under § 401k and (m) of the Internal Revenue Code. These regulations provide guidance concerning the requirements for designated Roth contributions under qualified cash or deferred arrangements described in § 401k. These regulations affect section 401k plans that provide for designated Roth contributions and participants eligible to make elective contributions under these plans. Located at: Benefitslink.com , December 2005. Click on headline for full article.

Tax Diversification and the Roth 401k - Summary: The new Roth 401k feature becomes available for retirement savings plans on January 1, 2006. This report analyzes the technical features of the new Roth provision and suggests which participants should—and those who should not—consider using the new feature. The study also points out that the Roth 401k affords many plan participants the ability to pursue a valuable new strategy in their plan accounts—the strategy of tax diversification. Located at: Vanguard Center for Retirement Research , October 2005. Click on headline for full article.

Allowing Participants to Decide When to Pay Taxes: New Roth 401k Contributions - Summary: In some situations, it is better if employees pay taxes in the year the money is deferred rather than in the year the money is taken out of a 401k plan. As of January 1, 2006, employers can provide employees with an exciting new tax planning tool by adding a qualified Roth contribution program to the 401k plan. Located at: Porter, Wright, Morris & Arthur LLP , September 2005. Click on headline for full article.

Roth 401k - Summary: The Economic Growth and Tax Relief Reconciliation Act of 2001 added section 402A to the Internal Revenue Code. Section 402A provides for designated Roth contributions to 401k plans. This is a good summary of the requirements, advantages, disadvantages and more. Located at: Transamerica Retirement Services , May 2005. Click on headline for full article.

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