Are Roth 401(k) Accounts a good retirement-related investment option? Yes, but with certain conditions, according to a new four-minute video clip on the CNN Money Web site. (You will need at least Version 9 of the Flash Player to view this online video.)

In this “Ask the Expert” video segment, Walter Updegrave, who is a senior editor with “Money Magazine”, points out that Roth 401(k) Accounts do have several advantages. Since employee contributions to them are of an after-tax nature (versus the pre-tax contributions to a regular 401(k) account), you will not have to pay any further taxes on this money once you reach retirement. In addition, contributions to Roth 401(k) Accounts are not subject to required minimum distributions (RMDs) at age 70 ½ and do not affect your Social Security benefits.

“Right now, about 25 percent of 401(k) plans are offering the Roth option, and more and more plans are probably going to start including it in the future,” says Updegrave.

There are a few things, he says, that you need to remember about Roth 401(k) Accounts:

(1) Since contributions to it are taxed now, this will affect your current paychecks.
(2) If you receive an employer match, these contributions will go into your regular 401(k) account and not your Roth Account.
(3) Just as you diversify your regular 401(k) with different types and percentages of investment options (stocks, bonds, etc.), you should similarly diversify from a tax standpoint. Split your money between your regular 401(k) plan and Roth 401(k) Account.
 
NADART already offers the Roth 401(k) option as a feature of our plans. Whether you sponsor a plan with us or are interested in learning more about our plans and the features we offer, our representatives can help. Contact a NADART representative today at (800) 462-3278, ext. 7161 or by e-mail at nadart401k@nada.org. You may also complete our online Product Information Request Form.