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Is it feasible for a Plan Sponsor to opt out of Roth Deferrals (and Catch-ups altogether) and advise participants to seek advice on establishing a Roth IRA?

Posted

Catch-up contributions are not mandatory.  Roth is not mandatory.  So, yes, it could be done.

The definition of feasible is "possible to do easily or conveniently".  If removing these features has the participants showing up on your doorstep with pitchforks and torches, then it certainly is not feasible.

A Roth feature within a 401(k) plan is a much better deal than a Roth IRA.  The Roth IRA has much lower limits that, based on income, phase out to zero.

Posted

If by feasible you mean allowable then yes. You can eliminate catchup if you don't want to deal with ROTH.

Depends on the client how the employees will receive that.

As for seeking advice on establishing a ROTH-IRA, I'm guessing most of the folks who will have mandatory ROTH catchups will be over the income limits to directly do a ROTH IRA contribution. Though some folks who max out including CATCHUP, also max out their IRA contribution already, whether that is ROTH, nondeductitible, or backdoor ROTH via nondeductible.

 

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