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My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million.

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The New Roth 401(k) Is Here





Great summary from Fool.com on Roth 401(k), which will become available in 2006. I believe in saving, and Roth 401(k) is an even better tool for savers than Roth IRA.

From Fool.com:

Beginning in 2006, a 401(k) plan may allow employees to designate some or all of their elective contributions as Roth contributions. Unlike regular 401(k) contributions, which are excluded from the employee's taxable income, any amount designated as a Roth contribution would be included as taxable income to the employee. But any qualified distribution from designated Roth contributions, and the related earnings thereon, is completely free from federal tax. Also, unlike regular contributions, Roth 401(k) contributions are allowable regardless of your income level. So, for many taxpayers, this could be the only way that they could participate in a Roth account. Sweet.

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