| Brand new employer sponsored retirement plan is a | | | | the Roth 401k plan uses "after-tax" dollars. However, |
| hybrid of a traditional 401k and a Roth IRA. | | | | with the Roth 401k, withdrawal of your money at |
| Income tax rates have been cut, the marriage | | | | retirement will be tax free like a Roth IRA. The |
| penalty done away with, and the "death tax" is also | | | | traditional 401k plan defers the tax owed during your |
| on a path to no more. All of this is a result of the | | | | career until retirement. |
| Bush administration's Economic Growth and Tax Relief | | | | Although it may sound like the best of both worlds, it |
| Reconciliation Act which was passed by a Republican | | | | is important to note that no employer is required to |
| congress in 2001. Another provision of that act went | | | | offer this new Roth 401k plan. In fact, a recent |
| into effect on January 1st, 2006, a hybrid of a | | | | survey by employee benefits consulting firm Hewitt |
| traditional 401k and a traditional Roth IRA called the | | | | and Associates found that only 31 % of employers |
| Roth 401k. | | | | currently offering the traditional 401k plan are |
| Yet another employer sponsored savings plan, the | | | | considering implementing the new Roth 401k. |
| new Roth 401k works in almost the same way as a | | | | Contribution limits for the retirement plans are: in |
| traditional 401k plan. Workers invest a portion of their | | | | 2005, $14,000 for a 401k and $4,000 for an IRA, |
| income into a fund along with contributions from their | | | | whether Roth or traditional. In 2006, this amount will |
| employer (if any). The difference is that the | | | | increase to $15,000 for both 401k and IRAs. |
| traditional 401k is funded with "pre-tax" dollars and | | | | |