ROTH 401k Permanent, Take Advantage Now!
Matthew Paulson
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In the beginning of 2006 an interesting piece of legislation in the financial world became in effect. US Workers now had another option for a retirement account which was a combination of the ROTH IRA and the 401k, Congress had implemented it on a trial basis and was set to expire in 2010, however a 
new law has made the option permanent. The legislation was part of the Page Pension Protection act which passed congress and was signed by the president in late August.
A lot of employers were reluctant to offer the 401k because of its status and it cost quite a bit of money for a company to setup the plan for their employees, but now that the ROTH 401k is here to stay, it will become part of many more Americans retirement plans.
For those who aren't in the know yet, a 401k is a retirement plan that many corporations have which allow their employees to move a certain percentage of their income into a retirement account, which they do not have to pay taxes on until they retire. The employee can pick between a number of different things they would like to invest in.
So what is a ROTH 401k? It's a combination of a traditional 401k retirement plan from a company and a ROTH IRA. You invest after-tax money in a ROTH 401k, much like a ROTH IRA, rather than before-tax dollars like in a traditional 401k and IRA. The beauty of the ROTH versions of retirement accounts is that you pay the taxes up front before years of compound interest, so you pay a lot less in taxes. You can invest up to $15,000 annually in your ROTH 401k and traditional 401k.
A lot of employers were reluctant to offer the 401k because of its status and it cost quite a bit of money for a company to setup the plan for their employees, but now that the ROTH 401k is here to stay, it will become part of many more Americans retirement plans.
For those who aren't in the know yet, a 401k is a retirement plan that many corporations have which allow their employees to move a certain percentage of their income into a retirement account, which they do not have to pay taxes on until they retire. The employee can pick between a number of different things they would like to invest in.
So what is a ROTH 401k? It's a combination of a traditional 401k retirement plan from a company and a ROTH IRA. You invest after-tax money in a ROTH 401k, much like a ROTH IRA, rather than before-tax dollars like in a traditional 401k and IRA. The beauty of the ROTH versions of retirement accounts is that you pay the taxes up front before years of compound interest, so you pay a lot less in taxes. You can invest up to $15,000 annually in your ROTH 401k and traditional 401k.