What would be an effective way to get my employer to offer a Roth 401k?

Question

My employer currently offers a traditional 401k (tax deferred contributions and gains) but being rather young, I'd prefer to have a Roth 401k (post-tax dollar contributions and tax free withdrawals upon retirement). It doesn't cost a company anymore to offer this benefit (not considering employer matching contributions) but it could be somewhat of an administrative burden, especially to initially set it up.

How do I convince my company that this is something they should do?

Actually I don't qualify for the Roth IRA due to AGI limitations but even if I did, I could only put in $4k per year while a Roth 401k allows me to put in $15,500 in 2007 and I want to maximize my retirement contributions.

Answer 1

When the ROTH option was first presented it was unknown what the adminstrative burden was actually going to be. Many employers were scared away by that thought. Many more were scared away because in reality...most people do not fall into your category so the intended audience is rather small. Most young people do not go over the AGI limit and most young people don't even contribute fully to their 401k...So what's the point of adding a feature that won't work.

That being said you want to know how to get your company to implement one. Best way to do that is to get everyone that you know who would contribute to one if it was available to contact the HR staff and ask for it. At the same time, talk to your boss, his boss, and his boss about adding it. Keep in mind that when it does get added they may not match on it. Some recordkeeping systems can handle the deferral but can't handle multiple match accounts or matching from multiple deferral sources. But, if you make 150k then you put 9k into your pretax account and 6k in your roth account. That takes full advantage of your match, gives you some tax deduction, allows you to put money into a roth, and gives you diversity in your withdrawal sources. Personally I'd advice against putting 100% into the Roth even at your young age...no guarantee that they won't tax the earnings when it comes out (it's tax law, they can change it any time they want) and if you're over the AGI limit already then your tax rate won't vary that much when you retire...historically tax rates have gone DOWN and I don't see that trend changing.

Answer 2

HOW fortunate - unemployed and wanting to rework to ROTH. you're in a position that some people would envy - a perfect probability no longer to get hit troublesome with taxes. I desire you would have suggested your age. there is an age the position i imagine there is not any cost in switching to the roth - 40 or older - in accordance to circumstances. call a chit broking service and open a ROTH account when you're youthful. lower price brokers like Schwab or constancy do no longer cost stupid costs like those banks do. they are going to allow you to understand step through step what to do. Like not in any respect get the former organization to deliver the examine to you - you first open the ROTH account and characteristic the organization mail your examine on to the hot account. And certain, you are able to integrate them. Double examine that this gained't placed you in a marvelous tax bracket. /

Answer 3

I must be missing something here.

Why don't you just open a Roth-IRA? Since you are young, you are probably under the $90,000 income limit to open one. Tax wise, it will have the same effect as a Roth 401k.

Answer 4

Is your company small enough for you to speak with the decision maker? If not, your best bet is to contact the company that offers your plan. If you can contact your company's point of contact or broker of record, that would be best.