Does Your Employer offer a Roth 401k?

[jmjj215]

I'm just curious. Mine started to, as of January 2007. It's a great thing. There are no income limitations, and, if you're under the normal Roth IRA income limitations, you can contribute to [i]both[i]. That's 4k per spouse, plus 15k for the Roth 401k per year.

[Broken Arrow]

Just saw your software improvements and website. Very impressive.

[jIM_Ohio]

My employer has a Roth 401k. I want the current tax deduction from a traditional 401k. Once our income exceeds Roth IRA limits, I will use the Roth 401k, and my current 4-5k Roth contribution will move to a taxable account.

Account diversification is important. If someone puts all their money into Roth accounts, I could see the government taking away the "tax free" withdraw promise and this could penalize people which only depended on the Roth accounts.

[jmjj215]

Originally Posted by Broken Arrow

Just saw your software improvements and website. Very impressive.

Thanks. It's been busy

[MonkeyMama]

no 401k

[jmjj215]

Originally Posted by jIM_Ohio

Account diversification is important. If someone puts all their money into Roth accounts, I could see the government taking away the "tax free" withdraw promise and this could penalize people which only depended on the Roth accounts.

That's a good point. Though I would hope, were that to happen, the peasants would revolt. It makes me disgusted just thinking that it maybe could happen.

[tinapbeana]

no 401k of any sort *pout*

[HiImSeth]

Yes, as of January 2007 we have one. I've recently opened a Roth IRA and will likely not contribute to a Roth 401K until I have the Roth IRAs maxed out.

[anonymous_saver]

My employer does not offer a Roth 401(k).

They offer a pension plan for the civil service/union employees.

For the Professional/Faculty staff they have a tax deferred account, they contribute 13% into an account, and they require the staff to pitch in 2.5%.

For everyone there are two other options, either (or both!) a 403(b) or a 457 plan.

I have contacted HR like 3 times about getting a Roth 403(b) and they said that they have a committee looking over the feasibility of getting it started. I have tried multiple times to connect with the committee, but no such luck for the past two months or so.

[jIM_Ohio]

Originally Posted by jmjj215

That's a good point. Though I would hope, were that to happen, the peasants would revolt. It makes me disgusted just thinking that it maybe could happen.

The worst case in this situation is:

1) I received tax free growth of principal inside Roth
2) The gains get taxed coming out

If worst case happens I would have done no better in a traditional IRA. The possible promise is enough to take advantage of the Roth, but I will NOT put all my eggs in that basket.

I don't think worst case would happen, but I would assume government might find a way to limit SS benefits for anyone with high Roth withdraws, for example.

[sweeps]

Originally Posted by jIM_Ohio

The worst case in this situation is:

1) I received tax free growth of principal inside Roth
2) The gains get taxed coming out

If worst case happens I would have done no better in a traditional IRA. The possible promise is enough to take advantage of the Roth, but I will NOT put all my eggs in that basket.

I don't think worst case would happen, but I would assume government might find a way to limit SS benefits for anyone with high Roth withdraws, for example.

I completely agree with your observation that Congress could pull the rug out from the Roth folks and that tax diversification is a smart move.

But I disagree with your worst case scenario. Congress could drastically increase tax rates and leave Roths alone. That would make the (traditional) 401k approach a big loser.

[jIM_Ohio]

I agree the 401k approach "fall behind" as tax rates increase, but I think the magnitude of the problem would not be "a big loser".

If tax rates go up, the problem will be much larger in scope than 401ks. Income, inflation and consumer spending would be far bigger impacts on economy with higher tax rate than 401k savings plans.

[Gruntina]

my company has considered it as they do have the matching 401k program... after a season of discussion and research, they turned down the idea of offering the Roth 401k saying they did not think it was a great choice to offer it at this time. Oh well!

[kv968]

Originally Posted by Gruntina

my company has considered it as they do have the matching 401k program... after a season of discussion and research, they turned down the idea of offering the Roth 401k saying they did not think it was a great choice to offer it at this time. Oh well!

One thing to consider also...any matching contributions a company makes won't go into the Roth 401k but rather a traditional 401k account.

[jmjj215]

Originally Posted by kv968

One thing to consider also...any matching contributions a company makes won't go into the Roth 401k but rather a traditional 401k account.

That's a good point.

I don't know how a company could think it's "not a good option" for their employees though. Since when is an option ever a bad thing (speaking generally...)?

[kv968]

Originally Posted by jmjj215

I don't know how a company could think it's "not a good option" for their employees though. Since when is an option ever a bad thing (speaking generally...)?

I agree, but sometimes I wonder how much thought or care some companies actually put into their 401k selections. I think some just pass it off to a fund company and let them deal with it as they see fit as long as it doesn't cost them.

[Gruntina]

Originally Posted by jmjj215

That's a good point.

I don't know how a company could think it's "not a good option" for their employees though. Since when is an option ever a bad thing (speaking generally...)?

I think it might have to do with the company being worldwide and most employees are not US citizens? I am not sure but they did mention about something related to cost but I don’t understand the full picture. I am going to search for that article as they posted that on our intranet site.


The company also gives a limit 1500 p/year towards the matching contribution so it is equal opportunity for everyone regardless of salary.

[Gruntina]

Originally Posted by kv968

I agree, but sometimes I wonder how much thought or care some companies actually put into their 401k selections. I think some just pass it off to a fund company and let them deal with it as they see fit as long as it doesn't cost them.

if it is a fortune 500 company or a very competive company, 401k selections and stocks are extremely important for benchmarking purpose. It also shows how well the people trust the company and the performance.

[kv968]

Originally Posted by Gruntina

if it is a fortune 500 company or a very competive company, 401k selections and stocks are extremely important for benchmarking purpose. It also shows how well the people trust the company and the performance.

I don't know. I work for a Fortune 500 company which uses Fidelity for their 401k plans and I could pick better funds than some of the choices we have.

[Gruntina]

Originally Posted by kv968

I don't know. I work for a Fortune 500 company which uses Fidelity for their 401k plans and I could pick better funds than some of the choices we have.

Same here with company using Fidelity. I work for HR so it was mentioned how Finance in terms of stocks, investiments, backflow, distrubutions is carefully benchmarked to get more or better customers and competive employees as we look for the one with the best skills/talents.