Your Company May Offer a Roth Option

Part 3 of 10 Things You Must Know About Roth Accounts

Many companies have added a Roth option to their 401(k) plans. After-tax money goes into the Roth, so you won’t see the immediate tax savings you get from contributing pretax money to a traditional plan. But your money will grow tax-free. (Any employer match will go into a traditional 401(k) account.)

For 2013 and 2014, you can stash up to $17,500 a year, plus an extra $5,500 a year if you’re 50 or older, into a 401(k). Contributions must be made by December 31 to count for the current tax year, and the limit applies to the total of your traditional and Roth 401(k) contributions. A Roth 401(k) is a good option if your earnings are too high to contribute to a Roth IRA.


Kiplinger Online