New From Your Employer: The Roth 401(k) Plan
by Peter James Lingane
Important changes may be in store for your employer-sponsored retirement plan. Starting this month, 401(k) plans, 403(b) plans and potentially the federal Thrift Savings Plan are allowed to accept aftertax elective deferrals. Elective deferrals to other types of plans, and all employer contributions including any employer match, remain on a pretax basis. If your employer amends their plan documents to allow for aftertax elective deferrals, you will have a choice between making a pretax or aftertax contribution. This article illustrates how you might approach this decision.
In this article
- Tax-Advantaged Plan Basics
- Average Tax Rate onDistributions
- Return Differential
- The Investment Timeframe
- Roth or Traditional?
- Less Tangible Considerations
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