Pioneer Investments to Add Roth Option to Solo 401k Product
BOSTON, MA, October 18, 2005 -- Pioneer Investment Management USA Inc. ("Pioneer") today announced that it will offer a new option to its Uni-K Plan that for the first time allows investors to make after-tax contributions to an individual 401k plan that generates tax-free retirement income.
This new 401k option, called the Pioneer Uni-K Plan with Roth, will be offered starting January 1, 2006, the date new federal tax rules take effect allowing after-tax (Roth) contributions to 401k retirement plans nationwide. Under the new rules, Roth contributions can be made to a new or existing 401k account, either as a substitute for, or complement to, an employee's pre-tax contributions.
"Pioneer is again at the forefront of providing innovative retirement plan options for the self-employed and high net worth individuals," says Christopher Laucks, Vice President of Retirement and Annuity Markets at Pioneer Investments. "The Roth Uni-K is a golden opportunity for many investors looking to diversify their retirement portfolio, hedge against possible future tax increases at retirement, and establish a tax-free legacy for future generations."
Laucks added: "This is a particularly important option for investors who want to maximize the amount they save for retirement. There are no income limits on Roth contributions to a 401k, and with federal rules limiting maximum salary contributions up to $15,000 ($20,000 if age 50 or older), investors who make the maximum contribution will want to consider the clear benefit of the Roth plan providing tax-free income at retirement."
In 2002, Pioneer was the first mutual fund company to launch an owner-only 401k plan, called the Uni-K Plan, designed exclusively for self-employed individuals and owner-only businesses. Pioneer is now the first to announce plans to offer an owner-only 401k with the Roth option.
The Roth option for 401k plans resulted from one of 400 new tax rules in the Economic Growth and Tax Relief Reconciliation Act of 2001(EGTRRA) and is set to expire December 31, 2010. The sunset provision on Roth 401k contributions creates a five-year window for investors to take advantage of the new rules and establish a source of tax-free income at retirement.
The IRS has not issued final rules on certain aspects of the Roth 401k, including how early withdrawals will be taxed. While the IRS has indicated that it expects to issue final rules this fall, Pioneer still expects to be able to offer the Roth option to its Uni-K product on January 1.
Like the Roth IRA, the Roth Uni-K allows after-tax contributions to fund tax-free retirement income. But the Roth Uni-K has fewer restrictions than the Roth IRA, including no income limits and higher contribution limits of up to $20,000 in the 2006 tax year (for investors 50 or older) versus only up to $5,000 with a Roth IRA.
Additional features offered through the Roth Uni-K may include wealth transfer benefits to heirs and, when combined with current contributions within the Pioneer Uni-K Plan, tax-deductible and tax-free investing.
About Pioneer Investment Management
Pioneer is the North American operating subsidiary of Pioneer Global Asset Management S.p.A. ("Pioneer Investments"), a global investment management group wholly owned by UniCredito Italiano S.p.A. Pioneer Investments operates offices in 16 countries and, as of September 30, 2005, managed over $185.5 billion in assets, approximately $48.3 billion of which was managed in the U.S.
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