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Roth IRA

04 / 10 / 2015 by Greg Freyman, CPA in Personal Tax

How Do Roth 401(K) Plans Work?

If your company offers a 401(K) plan to your employees, some of them may inquire about treating the contributions as Roth contributions. This is how you can be prepared to answer their questions about Roth 401(k) contributions.

 

What is a Roth 401(k)?

This type of employer-provided retirement account allows the employee to designate Roth contributions of up to $18,000 or $24,000 if 50 or older (reference IRC Section 402(g)) for the 2015 tax year. Similar to a Roth IRA, the contributions are made with after-tax dollars, but appreciate tax-free over time. A key benefit of the Roth 401(K) is that there is no income limit as is the case with a Roth IRA. You can earn $1 million and still be eligible.

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20 / 05 / 2015 by Greg Freyman, CPA in Personal Tax

Are Roth IRA Early Withdrawals Always Taxable?

Question:
I’m withdrawing from my Roth IRA before reaching the age of 59 1/2. Is this withdrawal subject to taxes and the 10% early withdrawal penalty?

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