written by Kay Pfleghardt
On January 1, 2006, employers were given the opportunity to offer their employees the new Roth 401(k) option1. Yet, as of January 1, 2017, only 49% of employers have chosen to implement this feature2.This month we take a look at why the Roth 401(k) is overlooked by so many plan sponsors, and what you can do to “Turbocharge your 401k” to keep your top employees happy.
The Roth 401k Powerplay
Regardless of which end of the wealth spectrum you fall, we can all agree that Roth IRAs are a great opportunity. Unfortunately, high income earners are disqualified from contributing directly to a Roth IRA. In 2016, if you and your spouse made anything over $194,000 you fell into this group. As it turns out, those high income earners are some of your most valued employees. Here’s something big that you can do to help them. Unlike the Traditional Roth IRA, the Roth 401(k) has no income limit restrictions. Under current tax law, employees are eligible to contribute up to $18,000 per year in after-tax money to a Roth 401(k), as long as their employer offers this option.