Roth 401k New Retirement Savings Plan

Roth 401k New Retirement Savings Plan

Roth 401k – New Retirement Savings Plan.
Brand new employer sponsored retirement plan is​ a​ hybrid of​ a​ traditional 401k and a​ Roth IRA.
Income tax rates have been cut, the marriage penalty done away with, and the death tax is​ also on a​ path to​ no more .​
All of​ this is​ a​ result of​ the Bush administration's Economic Growth and Tax Relief Reconciliation Act which was passed by a​ Republican congress in​ 2018 .​
Another provision of​ that act went into effect on January 1st, 2018, a​ hybrid of​ a​ traditional 401k and a​ traditional Roth IRA called the Roth 401k.
Yet another employer sponsored savings plan, the new Roth 401k works in​ almost the same way as​ a​ traditional 401k plan .​
Workers invest a​ portion of​ their income into a​ fund along with contributions from their employer (if any) .​
The difference is​ that the traditional 401k is​ funded with pre-tax dollars and the Roth 401k plan uses after-tax dollars .​
However, with the Roth 401k, withdrawal of​ your money at​ retirement will be tax free like a​ Roth IRA .​
The traditional 401k plan defers the tax owed during your career until retirement.
Although it​ may sound like the best of​ both worlds, it​ is​ important to​ note that no employer is​ required to​ offer this new Roth 401k plan .​
In fact, a​ recent survey by employee benefits consulting firm Hewitt and Associates found that only 31 % of​ employers currently offering the traditional 401k plan are considering implementing the new Roth 401k.
Contribution limits for the retirement plans are: in​ 2018, $14,000 for a​ 401k and $4,000 for an​ IRA, whether Roth or​ traditional .​
In 2018, this amount will increase to​ $15,000 for both 401k and IRAs.

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