Roth 401k Question

[Guest gfowler]

Is it permissible to allow participants to elect to contribute to either the pre-tax or the roth 401k, but not both? (Not allow them to elect 2% Roth and 2% pre-tax)

[Guest mjb]

regs require that ee must be allowed to contribute any portion of an elective contribution to Roth 401k and to maintain separate accounting for roth accounts.

[JDuns]

So the answer is "No, you can's force the employee to pick 4% Roth or a 4% regular without allowing an election of 2% of each"

[stephen]

Related comment-

Why would you offer Roth 401(k)'s when considering the two sentences in bold below?

EBIA Comment: The final regulations generally apply for plan years beginning on or after January 1, 2006. (The preamble discusses the interplay between the effective dates of these regulations and the final 401(k) regulations for non-calendar-year and collectively bargained plans.) The preamble reminds plan sponsors that “there are other aspects of designated Roth contributions” not addressed by the final regulations that nevertheless must be reflected in the plan’s terms. And the preamble notes that the final regulations do not address the fact that many EGTRRA provisions, including the designated Roth provisions, will not be effective after December 31, 2010 unless future legislation extends the expiring provisions beyond that date. For more information, see EBIA’s 401(k) Plans manual at Sections IX.A (“Elective Deferrals”), particularly IX.A.12 (“Designated Roth Contributions (Option Available in 2006)”).