Roth 401(k) accounts will - with the blessing of the Internal Revenue Service - make their debut effective Jan. 1, 2006.Unlike the 401(k), which is funded with pretax dollars, the Roth 401(k) is funded with after-tax dollars from the employee. Any employer match would remain taxable.
As with Roth IRAs, the gains are tax-free, whereas the gains in a traditional 401(k) are taxed as ordinary income. To qualify for a tax-free withdrawal, the participant must be age 59-1/2, and the Roth account must have been opened at least five years before distribution.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access