Designated Roth Accounts or Roth 401k are simply 401k plans that allow employees to designate all or part of their elective deferrals as qualified Roth 401k contributions. Qualified Roth 401k contributions are made on an after-tax basis, just like Roth IRA contributions. This means that employee contributions and earnings are entirely free from federal income tax when distributed from the plan, subject to qualifications. Contributions are not deducted from income (as regular 401k or deductible IRA contributions are). This article discusses qualified Roth 401k contributions.
Caution: 401k sponsors are not required to allow Roth contributions to their plans. But if …Read More