401k rollover rules: ROTH 401(k)'s... A Wolf in Sheep's Clothing

Roth 401 (k) Review: on 1 January 2006, employees can make their 401 (k) contributions in any pre-tax or after tax, or a combination of both. The limits of the contribution that apply to this 401 (k) contributions in 2006 (whether made before tax and net of taxes, or both) are: 1. Limit base of 15,000 $ from more than 2. $ 5000, and the employees, who 50 years or employer older.The remains responsible for withholding federal tax (and state and local tax revenues, if any) and payroll taxes from the party, after taxes of 401 each dependent K () .



* although the contribution of non-federal (state or local authorities or, where applicable) income tax is deducted from contributions before taxes, taxes on wages apply amounts withheld as contributions. Absent additional pre-tax IRS tax guide for both projects after-tax contributions and reporting each employee W-2, as happens now. We hope, 401k rollover rules, that the IRS (before issuing W-2 forms for tax year 2006) propose a new code for use on the Form W-2, a post-tax burden contributions.



A separate account must be established for each participant who wishes to make Roth 401 (k) contributions.Rules Roth 401 (k) to help you decide, it is important to understand the rules for Roth 401 (k) Roth 401 (k) accounts have different accounts - after payment of contributions can not be combined with pre-tax contributions.Distributions Roth 401 (k) will be exempt for purposes of federal income tax, provided that a 5-year participation requirement for eligibility of the events are met: a) a period of 5 years, starting from the first contribution to any Roth 401 (k) plan.



b by the employer) is limited to qualifying events to reach the age of 59 1 / 2, death, or disability.Rollovers Roth 401 (k) may be any other employer sponsored Roth accounts. To return to the Roth 401 K (), valid for 5 years from the date stated the first meeting, which has become an expense, or the date of receipt of the Rota was reserved established.Our following is a summary of our reserves. Please contact our office for further discussions on detail.A. IRS should issue guidance to clarify that in determining the five taxable year holding period, based on its calendar year, instead of year.



B. The requirement that the plan administrator of the plan of administration may be responsible for monitoring the right to assistance Rollover Roth 401 (k) plan and the time of Roth contribution was made before it would, 401k rollover rules, have been an obstacle to the acceptance of contributions rollovers to Roth and effectively restrict the transfer of these sums. Participants must be responsible for monitoring as the primary account and overturning moment Roth contribution was made.C. Sponsor plans to allow Roth contributions must also be able to include the provisions of the plan, setting standards in relation to these sources to account for all types of floor distributions.



D. IRS to issue sample or good faith amendments that plan sponsors may use without prejudice to the trust in previous letters determination, notification letters or letters of opinion regarding the classification of the conditions of his plans.E. Sponsors of 401 (k) plans allow Roth (K), which introduce the automatic application should be able to choose if, before tax,, 401k rollover rules, or Roth (k) contribution choice will be the default choice for participants.F. Sponsors of 401 (k) plans allow Roth (k) contribution to the program should be able to impose restrictions on capacity and frequency of plan participants to choose between Roth (k) contributions for the pre-programmed calendar year without violating IRS tax rules.



G. A new model, 401k rollover rules, of distribution with the distribution of light and a pre-tax elective and designated Roth contributions will be necessary. The current model has, 401k rollover rules, 6 pages length.H. The plan sponsor should be able to support a plan that only allows Roth contributions, not pre-deferrals.Final net salary NoteAgain, it is recommended that employers and sponsors of 401 (k) plans that are considering adoption Roth's position to take seriously the reservations mentioned above.



It may be best left for another race ahead and see how fare.Lawrence Groves is the director of services for