New Roth Opportunity for 401(k) Plans per Fiscal Cliff Deal Bookmark

The recently passed fiscal cliff deal (officially known as the American Taxpayer Relief Act of 2012) includes a new rule that allows more people to convert money in their traditional 401(k) plan to a Roth 401(k) account. Doing so is called an "in-plan Roth rollover."  Until now, only individuals eligible for a distribution (over the age of 59½ or terminated from employment, etc.) could elect a Roth rollover. The new provision expands eligibility to everyone. The Roth plan feature gives participants the option of paying taxes now on their retirement savings instead of when they withdraw money later from their accounts.
More plan participants may now take advantage of Roth provisions under the new arrangement

Please contact your relationship manager or plan administrator at Altigro for more information on enabling in-plan Roth conversions.
  • Who may participate? 
    Under the new rules, a Roth conversion would be available to any 401(k) plan participant whose employer offers a Roth account and conversion.
  • What is the benefit of a Roth 401(k) account? 
    Those who elect this conversion pay taxes on the balances transferred, but any future gains or withdrawals would be tax free.
  • Who may be a good fit? 
    If you expect your tax rate to be the same or higher in retirement than it is now, you might be better off with a Roth 401(k). Roth 401(k)s may also be a helpful estate planning tool for those who wish to prepay the tax liability on retirement accounts they are leaving to heirs.

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