Via the Wall Street Journal
Many employers are planning to add a Roth 401(k) option to their offerings of corporate benefits in the next 12 months, a new survey suggests, making it easier for workers to save money that can be withdrawn tax-free in retirement.
A provision in the tax law enacted in early January gives workers a chance to stockpile more tax-free earnings—but only if their employers’ 401(k) plans include a Roth option, along with the ability to move assets workers already have saved in tax-deferred 401(k) accounts.
This is a major benefit for young and even middle aged employees.
The attraction: While workers converting tax-deferred savings would have to count the assets converted as ordinary income, and pay an upfront tax bill, future earnings and retirement withdrawals generally would be tax-free. And even though Roth 401(k)s generally require mandatory retirement distributions starting at age 70½, retirees could roll the assets into Roth individual retirement accounts to avoid them.