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Can a company off both 401k and Roth 401k
Old 01-13-2008, 06:16 PM   #1
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Can a company off both 401k and Roth 401k

My company currently offers a 401k with a match of 6%. They also offer a retirement plan, that is also 6%.

My question is, is it possible to offer both a 401k and a Roth 401k? I am 24 years old, and I am really going to push it, if it is possible.
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Old 01-13-2008, 07:11 PM   #2
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I'm not sure what you mean by "retirement plan". Is this a Pension? If you mean a traditional 401k and a roth 401k, yes, they can offer both at the same time. Keep in mind though, that the combined limit between both Traditional and Roth accounts is still $15.5k, so you can't put 15.5k into both accounts. Also I believe the company match is added only to the traditional account, and not the Roth portion.
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Old 01-13-2008, 07:20 PM   #3
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My employer offers a choice of a regular 401k or a Roth 401k. Employees can contribute to both, either or neither, as long as total contributions between the two don't go over the 15.5k limit (20.5k if over 50). Like Olav said, the company match (if any) can only go in the regular 401k.
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Old 01-13-2008, 08:33 PM   #4
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We also have a 401k plan with a Roth option (as well as an after-tax option). Also keep in mind that the company match on Roth option contributions will be pre-tax.
Edit: oops somebody already said that.
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Old 01-13-2008, 09:49 PM   #5
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It looks pretty easy for most companies to add a Roth option to their 401k plan.
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Old 01-13-2008, 11:47 PM   #6
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Not to hijack this thread, but my employer has recently added the Roth feature to the 401k. Have you guys decided to use the feature? I find it very hard to calculate whether to jump in or not. I live in a high-tax area, (metro NYC) and have NO WAY of making any prediction on future tax rates.

So, do you hedge your bets, and go 50/50 ROTH/Traditional? Stick with tried-and-true traditional 401k, or what? How do they expect us to predict future tax rates Can any economist do that?
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Old 01-14-2008, 12:40 AM   #7
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Although my employer has introduced the option of a Roth 401k I am not planning to use it. I figure I'd rather have the tax deduction while I'm working and in a few years (soon I hope) when I am not I can start systemically moving 401k and Trad IRA money to a Roth when my marginal rate is lower.
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Old 01-14-2008, 09:27 AM   #8
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My old employer offered the Roth 401k for one year. We then got bought out and new employer does not offer Roth 401k.

YES we could contribute to both, up to maximum.
YES the match was pre-tax

Why do the Roth? Tax rates now are lower than they ever have been, many people would prefer to pay taxes now, than higher rates later. In addition to that, the Roth portion of the account would not be subject to RMD's (required minimum distributions) once the retiree turns 70.5.
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Old 01-14-2008, 09:31 AM   #9
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Quote:
Originally Posted by Olav23 View Post
Not to hijack this thread, but my employer has recently added the Roth feature to the 401k. Have you guys decided to use the feature? I find it very hard to calculate whether to jump in or not. I live in a high-tax area, (metro NYC) and have NO WAY of making any prediction on future tax rates.

So, do you hedge your bets, and go 50/50 ROTH/Traditional? Stick with tried-and-true traditional 401k, or what? How do they expect us to predict future tax rates Can any economist do that?
The higher your current marginal tax rate, the easier it is to decide to stay 100% with the traditional 401(k).

The lower your current tax bracket, the easier it is to go 100% with a Roth 401(k).

With middle tax brackets, I would probably go with a 50/50 split since it will give you the flexibility to choose how much to take out of the taxable portion and non-taxable portion in retirement.

But you are correct. The missing variable is your tax rate at retirement, so at best this is all a guessing game.
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Old 01-14-2008, 11:48 PM   #10
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Quote:
Originally Posted by Olav23 View Post
Not to hijack this thread, but my employer has recently added the Roth feature to the 401k. Have you guys decided to use the feature? I find it very hard to calculate whether to jump in or not. I live in a high-tax area, (metro NYC) and have NO WAY of making any prediction on future tax rates.

So, do you hedge your bets, and go 50/50 ROTH/Traditional? Stick with tried-and-true traditional 401k, or what? How do they expect us to predict future tax rates Can any economist do that?
The Roth option was added to our plan around '06, but we've always had ability to make after-tax contributions. As Im thinking about it now, that could better than a Roth...will have to investigate. Anyway I just started making a very small Roth contributions and I am working my way up to 50/50 or so.
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Old 01-15-2008, 12:44 PM   #11
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The company I work for offered a Roth 401k beginning of the year 2007, and it has become very popular (by raise of hands late in the year). My approach was to keep myself below the 15% tax bracket by investing in the traditional 401K, then any more contributions would go into the Roth 401k. Fortunately(?:confused, with my current salary, the std. deduction, and exemptions, I was able to have all of it directed to the Roth 401k.
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Old 01-22-2008, 12:40 PM   #12
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I do both just to attempt to diversify for the future. Taxes will definitely be higher by the time I retire, so if I can get some of my retirement out of that section great. Also, the 401 Roth actually allows me to piut away more money since it is 15,5000 after tax (essentially 20k pre-tax right?)
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