401k Recovery Advice

A Closer Look At The Roth 401(k)

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In Brief...

In a previous article (see Introducing The Roth 401(k)), we provided a high level overview of the Roth 401(k). On December 30, 2005, the Treasury Department and the IRS issued final regulations relating to Roth 401(k). Highlights of the Final Roth 401(k) Regulations Application of RMD Rules Confirmed Because regular Roth IRAs are not subject to required minimum distribution (RMD) rules, many people feel that the application of such rules to the Roth 401(k) in the proposed regulations was a mistake. However, the final regulations confirm that the Roth 401(k) is indeed subject to RMD rules because, unlike the regulations that apply to regular Roth IRAs, the regulations that apply to Roth 401(k)s do not expressly exclude the owner's Roth 401(k) assets from these rules. Employers Must Offer a Traditional 401(k) To Offer a Roth 401(k) In order to offer the Roth 401(k), your employer must offer it as part of a traditional pre-tax 401(k) plan. If it is not offered under your employer's plan, then you will not be able to participate - unlike the regular Roth IRAs, which can be established by individual taxpayers, Roth 401(k)s can only be offered by employers.

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