IRS Releases Roth 401(k) Rules and FAQs

The IRS and Treasury Departments recently published final regulations providing guidance on the new Roth 401(k) plans, along with a handy list of questions and answers about these plans.

Designated Roth contributions allow for employees to designate all or a portion of their 401(k) employee deferrals as Roth contributions, which would receive treatment much like a Roth IRA contribution (that is, they would be contributed on an after tax basis, but qualified distributions of those contributions, plus earnings, would be tax-free).

Roth 401(k) plans–which were first authorized by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)–are effective for taxable years beginning after December 31, 2005.

To learn about how Roth 401(k) plans work, read our story in the May 2005 issue of California Employer Advisor.

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Additional Resources:

Roth 401(k) Final Regulations

Roth 401(k) Contributions FAQs