The Internal Revenue Service recently issued proposed regulations for the new Roth contributions to 401(k) and 403(b) plans. Similar to Roth IRA contributions, Roth contributions to 401(k) and 403(b) plans will be made on an after-tax basis. When the Roth contributions are withdrawn, both the principal amount and earnings will come out tax-free provided certain requirements are met.
The effective date for sponsors wishing to incorporate a Roth program into their existing 401(k) or 403(b) plan is January 1, 2006.
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