TREASURY ISSUES ROTH 401(K) RULES
The Treasury Department has issued rules aimed at dismissing some of the uncertainties around Roth 401(k) plans. The guidance outlines the details of how plans should operate, as well as simplifying their accounting treatment. The rules will also allow employers to consolidate Roth 401(k) holdings for an employee who had a Roth 401(k) with a former employer.
Finally, the Treasury guidance clears up the tax treatment for withdrawals by a person under 59-11/42, or who hasn't been contributing to the plan for at least five years. In such cases, gains made within the Roth 401(k) are taxable upon withdrawal, and are subject to a 10 percent premature distribution penalty, though the principal contribution remains exempt.
Originally created as part of a 2001 law, the plans were to be eliminated after 2010, but the Pension Protection Act of 2006 made them permanent. The employer-sponsored savings accounts - which don't have any income limitations for participants - are funded with after-tax money up to a certain contribution limit. After an employee reaches the age of 59-1/2, all withdrawals from the account, including investment gains, are tax-free.
FILI LAUNCHES NEW FUNDS
Fidelity Investments Life Insurance Co. has introduced five new funds that are available via its variable annuity and life insurance products.
The new investment options include a trio of sector funds - VIP Consumer Staples Portfolio, VIP Materials Portfolio and VIP Telecommunications Portfolio - and two sub-advised funds - Fidelity Strategic Advisers Small Cap Portfolio and Fidelity Strategic Advisers Mid Cap Value Portfolio.
The three sector funds will provide customers of FILI's variable annuity and life insurance products with an opportunity to invest in a particular market segment or industry. The two sub-advised funds will offer additional investment options within their style categories.
Strategic Advisers Inc. will be the investment advisor for the two sub-advised funds, retaining OppenheimerFunds Inc. as the sub-advisor for the small-cap fund, and J.P. Morgan Investment Management Inc. for the mid-cap value fund.
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