Roth Contributions in 401(k) and 403(b) Plans

Allows Roth Contributions in 401(k) and 403(b) plans for taxable years beginning in 2006. The Roth Contributions are similar to the Roth IRA.

  • Allows members to designate all or part of their elective deferrals to a 401(k) and 403(b) plan as a Roth Contribution.

  • Earnings are tax-free if left in the plan at least 5 years and distributed after age 59 and a half.

  • These "after-tax" contributions will be tested along with pre-tax deferrals as part of the nondiscrimination test and would be combined with pre-tax elective deferrals for purposes of the maximum deferral amount.