The Roth 401(k) contribution option, even with almost five years of advance warning, is taking a while to catch on.Reports are that fewer than 20 percent of eligible 401(k) plans now have them, with the rest sticking with tried-and-true pre-tax deferral contributions. If field data is accurate, however, this tepid reception is about to change. When employers, especially those also wearing the hat of the highly paid employee, begin to run the numbers, Roth 401(k) accounts are looking very attractive. This view is especially true following the recent release of favorable final regulations on Roth 401(k) contributions.
Since Jan. 1, 2006, employers have been able to offer a new retirement savings option, the Roth 401(k). While the Internal Revenue Service has known about this option ever since it was approved as part of the massive Economic Growth and Tax Relief Reconciliation Act of 2001, the service did not hurry to issue final regulations on Roth 401(k)s until late in the afternoon before the very last business day of 2005.
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