• Should Your 401(k) Plan Allow (and Encourage) After-Tax Employee Contributors?
  • March 20, 2005
  • Law Firm: Winston & Strawn LLP - Chicago Office
  • One of the numerous changes to the rules governing tax-qualified plans made by EGTRRA was the addition of "designated Roth contributions" under Code Section 402A. Under that Section, beginning in 2006, a plan may permit an employee who makes elective contributions under a 401(k) plan to designate some or all of those contributions as Roth contributions. Although these designated Roth contributions are elective contributions under a 401(k) plan, unlike an employee's salary deferral contributions, they are currently includible in gross income. However, a qualified distribution of designated Roth contributions and their investment earnings are excludable from gross income.