Before people get too excited about Roth 401k plans realize that many
sponsors are going to avoid offering them at all.

an example of one consultants advice:

http://www.pensions.com/Roth%20401-2006.pdf

this article is biased towards businesses, not individuals. It points
out negative impacts on the providers and employers.

It did not point out the benefits (can roll into ROTH IRA upon leaving
company, withdraw rules for Roth IRA are more flexible-IMO).

That's the point, there is no good reason for the employer to sponsor a Roth
401k.

The benefits to the individual are swell, but if it is costly to the
employer and loaded with pitfalls, they are not going to happen.

"jIM" writes:

I wouldn't call it biased. It's pretty straight up.

The additional complications for the employer are real, and
whether they are a benefit for employees or not, those
complicatiosn have real costs which must be taken into account.
if their competitors start offering them).

Even so, for the employees themselves, Roths are not
necessarily any better, either.

And it goes into some detail with an example showing that the
same contgribution (once taxes are taken into consideration)
gets one back the same exact return later on if one assumes
tax rates stay the same. (Example was $3000 pre-tax into a
regular 401k vs. $2250 post tax into Roth 401k for folks in
25% bracket).

The bigger real advantage is that the annual cap on
contributions into a Roth is effectively higher - if
one puts $15k into a Roth, that's the equivalent of
putting ($15k * 1/(1-taxRate)) = $20k for someone in
the 25% bracket. *That* is a real benefit for high
income folks.


Regular 401k can be rolled into regular IRA which can then
be rolled into a Roth IRA (by paying taxes due - which is
not really any different from having paid them up front in
the first place in a Roth 401k). The ability to roll into
a Roth IRA is there, so that's not a specific benefit of
the Roth 401k except inasmuch as it removes one step in the
process.


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Looks like only about 15 percent of companies will offer the Roth 401k this year.