• Allowing Participants to Decide When to Pay Taxes: New Roth 401(k) Contributions
  • December 1, 2005 | Authors: Ann M. Caresani; M. Theresa Finneran; Paul A. Hanke; Richard J. Helmreich; James H. Prior
  • Law Firms: Porter Wright Morris & Arthur LLP - Cleveland Office; Porter Wright Morris & Arthur LLP - Columbus Office
  • This Employee Benefits Law Alert addresses the new Roth contribution feature that can be added to 401(k) plans starting January 1, 2006. The new option permits employees to designate some or or all of their elective deferral contributions as pre-tax or after-tax contributions. Thus, employees will be able to determine whether it makes more sense to pay taxes now or to pay taxes at retirement. This provides employees with a great tax planning tool to decrease their overall tax burden. Every employer with a 401(k) plan should consider whether this option will benefit its employees.