NADART now offers a Roth 401(k) contribution option for Investment Choice 401(k) plans. The Roth 401(k) option provides your employees with an alternative method of saving for retirement. Unlike in a traditional 401(k) plan, employee contributions made to a Roth 401(k) are made on an after-tax basis.  Income on those contributions are not taxed while in the plan (as is the case in a traditional 401(k) plan). However, the Roth 401(k) differs in that income on contributions can be withdrawn tax-free as long as the the withdrawal occurs more than five years after the first Roth Contribution and after age 59½ or upon death or disability.

 The Roth 401(k) option could be beneficial for the following types of employees:

• Any employee who expects to be in the same or higher tax bracket at the time they retire.
• Young employees who have years for their contributions to generate tax-free earnings.
• Highly Compensated Employees who are not permitted to contribute to a Roth IRA because their compensation is too high may instead use the Roth 401(k).
• Any employees who prefer to pay taxes now and will meet the tax law requirements that will allow them to withdraw their contribution earnings tax free.
• Those employees looking for greater flexibility with respect to estate and retirement planning.

Employees can still make traditional pre-tax 401(k) contributions, but by offering the Roth 401(k) option, you may be able to increase employee participation.