Roth in your 401(k)? Yes please!
Does your employer have a Roth option in your 401(k)? If not, WHY NOT? Since 2006, this option has been available.
If you work for a Santa Rosa or Sonoma County company with a 401(k) plan that does not have a Roth option, introduce us to the person in charge and we’ll share some information with them as to why this should be a standard option today. It isn’t likely to cost the company a dime and it certainly could save (especially younger workers) thousands in taxes down the road.
The Roth 401(k) combines elements of both a Roth IRA and a traditional 401(k) plan. The Roth 401(k):
- Does not limit participation by income, unlike the Roth IRA.
- Allows participants to contribute on an after-tax basis, like the Roth IRA, up to the amounts permitted under a traditional 401(k).
Therefore, higher-income employees who are ineligible to open a Roth IRA can instead contribute to a Roth 401(k) at higher amounts than are permitted in a Roth IRA. In addition, although some plans permit employees to make after-tax contributions to 401(k) plans, earnings on those contributions are taxed when distributed. By contributing to a Roth 401(k) plan, employees can contribute on an after-tax basis without being taxed in the future.
It just makes sense! Let us know if you’d like more info on this. Here is a good link –