A 401(k) plan under which elective deferral contributions are made to a section 401(k) plan. The contributions must satisfy the following requirements:
- Has been designated irrevocably by a participant as not excludable from the employee’s gross income
- Designated to be deposited into a designated Roth account under the 401(k) plan.
- The contribution is treated by the employer as includible in the participant’s gross income at the time the employee would have received the amount in cash if the employee had not made the election (hence subject to all applicable wage withholding requirements)
- The contributions are maintained in a separate account from other 401(k) assets.
IRC § 402A , IRS Notice 2005-95, Treas. Reg. §1.401(k)-1(f)(1), Treas. Reg. §1.401(k)-6, Treas. Reg. §1.401(m)-5
Additional Helpful Information
- Designated Roth contributions are allowed in 401(k) plans and 403(b) plans but not in SARSEPs or SIMPLE IRA plans.
- Designated Roth contributions are included in the same tests as pre-tax salary deferral 401(k) contribution
- Designated Roth contributions are subject to the salary deferral limits under IRC §402(g). Therefore, an individuals aggregate contribution for a designated Roth 401(k) and a traditional 401(k), 403(b) ,SARSEP or SIMPLE IRA cannot exceed the salary deferral limit in effect for the year, plus catch-up contribution.