Save time with our cheat sheets, fact sheets, checklists & books!

February 16, 2009

Roth 401(k) Program

Print

Definition

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.

Referring Cite

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.
More

Keep Learning

Applicable RMD Age

Applicable RMD Age The first year for which an IRA owner or plan participant must begin to take RMDs from their tax-deferred retirement account. RMDs

SIMPLE 401(k) Plan

Definition A SIMPLE 401(k) plan is a 401(k) plan established by a small business for it’s employees. Earnings accrue on a tax-deferred basis and distributions

Required Minimum Distribution (RMD)

Definition The minimum amount that must be withdrawn from retirement accounts, including qualified plans, 403(b) accounts, 457(b) accounts or IRAs, each year.  For retirement account

Required beginning date (RBD)

Definition The date by which a retirement account owner must begin distributing required minimum distribution (RMD) amounts from a Traditional,  SEP or SIMPLE IRA, a

Be among the first to know when

IRA Rules
Change